Uncertainty dogs Statec's predictions

Luxembourg's economy is expected to grow 4% in 2011, according to Statec's forecast for the remainder of the year.

Despite the positive initial outlook, the data analysts have warned of a downturn in the performance of the international economy.

The forecasts were announced on Tuesday during Statec's Conjoncture where the organisation's director, Serge Allegrezza, laid bare the potential impact of uncertainties such as Italy's financial problems.

The company head highlighted that the financial sector showed no signs of recovery, with banking business in decline. In contrast, investment funds, mutual funds and insurance activities showed strong sticking power.

The non-financial services continued their downward trend, noted since the beginning of 2011.

Regarding consumer costs, Luxembourg's inflation rate gradually increased from 2% in early 2010 to more than 3.5% in the second quarter of 2011.

This follows a growing international trend, prompted by a gradual rise of commodity prices since mid-2009.

2011 showed positive employment rates, with the proportion of those in work growing by 2.5% over the course of a year.

Employment rates for cross border workers grew more sharply than for resident workers, though the proportion of jobs held by cross border workers was lower compared to the pre-crisis rate.

At the beginning of the year, cross border workers assumed less than half of the newly created jobs in the Grand Duchy, compared with two thirds before the crisis.