07.10.202609:27:15UTC+00Luxembourg Economy Contracts in Q2

Luxembourg’s economy shrank by 0.9% quarter-on-quarter in the second quarter of 2026, after a revised 0.3% expansion in the previous three-month period. This was the first decline after six consecutive quarters of growth. The contraction was driven by a drop in gross fixed capital formation (-1.9% vs +6.3% in Q1) and a further, though slightly milder, fall in household consumption (-0.3% vs -0.8%). Growth in government spending also lost momentum, easing to 1.1% from 1.8%.

External trade exerted additional downward pressure on activity. Both exports (-0.4% vs -1.2%) and imports (-0.8% vs -2.1%) continued to decline, though at a slower pace than in the previous quarter.

On the production side, output fell in several key sectors: industry, including energy and water supply (-3.7% vs -1.6%); construction (-2.1% vs +2.7%); trade, transport, accommodation and food services (-0.8% vs +1.1%); and financial and insurance activities (-1.5% vs -0.7%). By contrast, value added in agriculture, forestry and fishing strengthened markedly, with growth accelerating to 4.5% from 0.9%.

On a year-on-year basis, GDP expanded by 1.3% in Q2, moderating from a revised 2.8% increase in the first quarter.