The AAA rating by Fitch and DBRS Morningstar confirms once again the soundness and stability of the Luxembourg economy. The two rating agencies highlight the country’s significant budgetary room for maneuver which has been achieved thanks to the prudent fiscal policy of the past few years. This has given the government the freedom to react to the COVID-19 crisis by putting in place generous measures to support the economy.

Short recession

DBRS Morningstar and Fitch estimate that the recession brought by the pandemic will be significant, but less severe in Luxembourg than that in the Eurozone in general. In 2021, the economy is expected to recover to pre-crisis levels. The two rating agencies attest that, despite the difficult economic context, the fundamentals of the Luxembourg economy remain solid.

An attractive destination for investment

Regarding the months ahead, the agencies indicate that much uncertainty remains regarding the course of the COVID-19 pandemic and the pace of the economic recovery. However, despite this and the less favourable external environment, the agencies consider that Luxembourg should be able to manage the risks if the country continues its prudent political action in economic and financial matters. DBRS also recognises the efforts of the government in the field of tax transparency and believes that Luxembourg will remain an attractive destination for investments.

“I am pleased that the two rating agencies share the observation that Luxembourg is mobilising the necessary means to counter the economic effects of the COVID-19 crisis,” comments Minister of Finance Pierre Gramegna. They also attest that economic policy and the government’s prudent fiscal policy in recent years provides a pledge of confidence and makes it possible to reconfirm the maintenance of the best possible rating, namely the “AAA” rating with a stable outlook for the Grand Duchy.”