© AFP
The Director of the National Institute of Statistics and Economic Studies (STATEC), Serge Allegrezza, also stated that the next wage indexation is likely to be triggered on 1 July.
According to STATEC’s first Economic Outlook for the year 2022, the Institute expects inflation to decrease in 2023.
“As promised,” STATEC has reassessed its calculations, which the Institute updated at the time for the tripartite negotiations, and has come to the conclusion that the Tripartite measures will “more than compensate” for the loss of purchasing power – at least for 2022, Allegrezza explains. Inflation currently sits at 5.8%.
In its main scenario for 2023, STATEC is banking on a short war in Ukraine, a coronavirus which has become endemic, less pressure on prices, and a not-too-restrictive monetary policy with lower inflation. In this scenario, STATEC expects inflation to be around 2.8%, albeit with some uncertainties remaining. For instance, a full embargo on Russian oil and a prolonged war in Ukraine, which would last until 2023, would keep inflation higher than the estimated 2.8%, i.e. above 4%. In this case, renewed tripartite negotiations would have to take place. The Central Bank would raise interest rates and a recession could no longer be excluded.
In the first trimester, Luxembourg’s economy maintained its growth even though companies, the retail sector, and consumers were still affected by the conflict in Ukraine.