Luxembourg’s economy holds steady; 0.4% QoQ GDP rise
Conjoncture Flash August 2026: Despite the turbulent environment, economic activity holds steady
Conjoncture Flash August 2026 MONTHLY PUBLICATION ON THE STATE OF THE LUXEMBOURG’S ECONOMY – AUGUST 2026 DESPITE THE TURBULENT ENVIRONMENT, ECONOMIC ACTIVITY HOLDS STEADY The turbulence linked to the international environment has been clearly reflected in business surveys over the past few months, both in the eurozone and in Luxembourg. Economic activity in the eurozone, however, held up well in the 2nd quarter and has shown moderate but steady growth over the past few quarters. Economic activity in the eurozone held up well in the 2nd quarter of 2026, with GDP growing by 0.4% quarter-over-quarter. This result was better than expected (the initial consensus among analysts had projected a 0.2% increase), given the negative signals posed by the energy inflation shock linked to the conflict in the Middle East and the deterioration in business sentiment surveys observed during the spring. Economic activity rebounded in France, rising 0.2% (after a 0.1% decline in Q1), supported by a rebound in aerospace exports and capital goods. A similar increase was recorded in Germany1 , driven there as well primarily by exports and, to a lesser extent, by household consumption, while investment declined. Spain (+0.7%) also maintained a pace of growth similar to the average observed over the previous four quarters, remaining a major contributor to overall growth. Ireland, whose GDP growth is particularly volatile, has had a significant impact on the eurozone’s GDP figures in recent quarters. Unlike in the 1st quarter, when it weighed heavily on eurozone growth2 , it is making a positive contribution this time around. Excluding Ireland, the change in eurozone GDP stands at 0.3% quarter-over-quarter, a result identical to that of the previous three quarters. Beyond the volatility linked to Ireland’s performance, the underlying trend in the eurozone is therefore one of growth that is certainly moderate (with notable differences across countries) but relatively steady. This picture contrasts with the significant fluctuations observed in business and consumer sentiment surveys over the same period. The views of economic actors have clearly reflected the upheavals of a destabilized international environment, marked in recent months by the consequences of the war in Iran (and in particular rising energy prices). Despite a brief lull in June and July following the signing of a memorandum of understanding between the United States and Iran, tensions between the two parties have since escalated significantly. The number of ships transiting the Strait of Hormuz, which had temporarily rebounded, has fallen back to its lowest level, and there are currently no concrete signs of a breakthrough on the horizon. ━ And in Luxembourg? In Luxembourg, business3 and consumer confidence indicators— which, like those in the eurozone, had slumped during the spring— are recovering slightly as summer begins, but it would be risky to bet on the start of a turnaround.
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