BCL revises 2013 growth projections

Photo: Guy Jallay

(CS) Luxembourg's Central Bank (BCL) has revised its growth forecasts for 2013, ending the year on a more optimistic note with GDP growth now estimated around 1.9 percent.

This is above projections from June this year, which foresaw only limited growth somewhere between 0.5 percent and 1.1 percent.

One of the reasons cited for this positive development was a stronger banking sector, which continues to benefit from a better economic climate in the eurozone and the EU as a whole.

At the same time, however, the BCL warned that the dependence on the banking sector is a risk factor in Luxembourg's economy, as international trends and events can have a significant impact on the Grand Duchy.

E-commerce trouble on the horizon

For 2014 and 2015 the BCL meanwhile predicts growth of around 2 percent. However, for 2015 the bank also said that growth could take a significant hit, of around 1 percent, pending on developments around e-commerce taxes, which Luxembourg will lose in two years' time.

From 2015, e-commerce taxes will be levied in the country where the goods are ordered from, not where the company is based. With many companies in this sector, including Amazon and iTunes, based in the Grand Duchy, this will lead to a significant loss in VAT for Luxembourg.

Despite the 2 percent growth projection, the BCL commented that 4 percent growth are needed to successfully curb unemployment. Additionally, the bank pointed towards problems in investments, which had declined both within the private and public sector.