On October 5, 2024, DBRS Ratings GmbHconfirmed the Grand Duchy of Luxembourg's long-term foreign and local currency issuer ratings at AAA. At the same time, DBRS Ratings GmbH affirmed Luxembourg's short-term foreign and local currency issuer ratings at R-1 (high). All rating trends remain stable.

DBRS Ratings GmbH initially issued this rating in November last year, while Scope Ratings and Fitch Ratings published similar ratings in December 2023 and April 2024, respectively.

DBRS Ratings GmbH is the fourth-largest credit rating agency globally, with a market share of 2%-3%. It is one of only four external credit assessment institutions recognized by the European Central Bank (ECB), alongside S&P, Moody's Investors Service, and Fitch Ratings.

According to DBRS Ratings GmbH, Luxembourg's credit fundamentals remain very strong. Its economy has withstood recent shocks, and cyclical headwinds are expected to gradually subside.

Statec, Luxembourg's national statistics and economic research institute, forecasts that real GDP growth will accelerate from 1.5% in 2024 to 2.7% in 2025, driven primarily by monetary easing and increasing external demand for financial services exports.

Nevertheless, like other EU economies, Luxembourg faces significant downside risks, such as escalating geopolitical tensions or global trade disruptions. While fiscal results have weakened compared to the pre-pandemic years, they remain favorable compared to most other Eurozone countries. According to the 2025 budget forecast, Luxembourg’s general government deficit will account for 0.6% of GDP in both 2024 and 2025.

DBRS Ratings GmbH believes that Luxembourg has ample fiscal space to accommodate moderate budget deficits in the coming years without jeopardizing its AAA rating. The country’s low public debt-to-GDP ratio and significant government assets further strengthen its repayment capacity.

The credit rating reflects Luxembourg's exceptionally strong public finances. Effective governance, a stable political environment, a developed and prosperous economy, and a strong external position also support the rating. These credit strengths offset challenges stemming from the country's small economic size, limited diversification, vulnerability to external shocks, and potential financial stability risks.

DBRS Ratings GmbH expects real GDP growth, service exports, and private consumption to rebound. The country's sound institutions, stable political environment, thriving economy, and robust external position explain why Luxembourg maintains its AAA rating.