Global and Luxembourgish News: 22th December- 12th January 2026
Weeks 52–02:
Global markets entered the new year cautiously as the euro-zone closed 2025 on a resilient footing while China signalled fresh monetary easing to support growth in 2026. Mixed inflation dynamics in China highlighted persistent weakness in industrial demand and the challenges of economic rebalancing. Funding and trade themes remained in focus as global policy shifts and currency dynamics shaped the outlook for international capital flows. In Luxembourg, banking activity and fund-sector assets expanded, underscoring the continued strength of the financial centre despite softer sentiment indicators. Overall, the period reflected a measured transition into 2026 with selective resilience and cautious optimism across major economies.
Luxembourgish News
Luxembourg Banks’ Balance Sheets Expand into Year-End
Picture: Stock Library
Preliminary data from the Banque centrale du Luxembourg show that Luxembourg’s credit institutions grew their aggregated balance sheets through late 2025, reaching approximately €1.008 trillion at the end of November, up over 0.5 % from October. This expansion reflects ongoing credit demand and financial activity in a low-rate environment as households and businesses continue to borrow despite global uncertainty. Analysts see this as a sign of resilience in the financial sector, with lending growth outpacing some earlier 2025 trends. The increase in balance sheet size may also signal renewed confidence among banks and investors in Luxembourg’s banking hub role. These figures come as consumer confidence surveys reported mixed results, with some softening in sentiment late in the year.
Statistic:
Luxembourg’s banking sector assets exceed 15× national GDP, reflecting its role as a cross-border financial hub rather than a domestic lender.
Source: BCL
Luxembourg UCI Industry Reports Net Asset Growth in November 2025
Picture: Stock Library
Regulatory data show that Luxembourg’s undertakings for collective investment (UCIs) recorded a positive variation in total net assets at the end of November 2025, rising to approximately €6.18 trillion. This represented a month-on-month increase of 0.29 %, reflecting net capital investments and sustained interest in European investment funds. Over the past year, the UCI industry’s net assets climbed nearly 5.82 %, signalling robust fund-sector performance despite broader market volatility. The data suggest continued global investor confidence in Luxembourg’s fund centre as a diversified hub for cross-border investment. Fund managers cite positive inflows, particularly into diversified and thematic strategies, as key drivers behind the solid performance.
Definition:
UCI (Undertaking for Collective Investment): a regulated investment vehicle that pools investor money into funds managed by professional asset managers.
Source: CSSF
Global News
Euro-Zone Ends 2025 on a Resilient Note Despite Slower Growth
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The euro-zone economy expanded at a slower pace in December but still closed out 2025 with its strongest quarterly growth in over two years, according to PMI surveys showing composite activity above the 50 expansion threshold. Services continued to power the expansion even as manufacturing contracted, reflecting stubborn structural weaknesses in goods sectors. The fourth-quarter PMI average marked the highest reading since mid-2023, underlying steady momentum across major economies. While U.S. tariffs and global trade pressures persist, domestic consumption and service activity have helped sustain growth across the bloc. Analysts say this trend supports modest expansion prospects for 2026 while keeping policymakers cautious on monetary policy.
Statistic:
Services account for roughly 70% of euro-zone GDP, explaining why resilience in this sector can sustain growth even when manufacturing slows.
Source: Reuters
China’s Central Bank Pledges Easing to Support Growth
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China’s central bank announced it will lower the reserve requirement ratio (RRR) and cut interest rates during 2026 to maintain ample liquidity and support economic growth, signaling more accommodative policy ahead. The move aims to counter persistent weak demand and structural pressures while boosting domestic credit flow. Officials emphasised the use of multiple monetary tools to stimulate lending, balance credit growth and guide reasonable expansion of total loans. The central bank also reiterated its commitment to a stable yuan exchange rate. Economists view this as part of Beijing’s broader strategy to underpin its five-year development plan and sustain domestic demand amid ongoing property sector weakness.
Definition:
Reserve Requirement Ratio (RRR): the share of deposits banks must keep at the central bank. Lower RRR frees cash for lending to households and businesses.
Source: Reuters
China Consumer Inflation Hits 34-Month High as Deflation Persists
Picture: Stock Library
In December, China’s consumer price index rose to a 34-month high, driven mainly by food prices, but the annual rate remained weak compared with historical averages. Despite this uptick, producer price deflation continued for a fourth year, highlighting persistent structural challenges in manufacturing and excess capacity. Weak demand and ongoing property market issues continue to drag on broader economic sentiment. The government has stepped up stimulus measures, including special treasury bond allocations to support consumer spending in 2026. While growth is expected to meet the 5 % target for 2025, analysts say further policy support may be needed to sustain momentum into the new year.
Fun Fact:
Food represents nearly 20% of China’s CPI basket, meaning food price swings have an outsized effect on headline inflation compared with many Western economies.
Source: Reuters
