"Volkswirtschaftsmonitor" Q3/2024

In the second quarter of 2024, the US economy recorded solid growth, while the economic weakness in the eurozone continued. Recently, the first signs of a slowdown on the labor markets have also become apparent, particularly due to the decline in job vacancies and the slight increase in the unemployment rate in the US. The weak economic development in the eurozone is having a significant impact on external demand and therefore on overall economic development in Liechtenstein. Despite the convergence of inflation rates towards the central banks' respective price stability targets, core inflation remains high, which could delay further interest rate cuts. The financial markets reacted positively to the interest rate cuts in September, but the susceptibility to corrections due to high valuations, geopolitical tensions and macroeconomic uncertainties remains high, as the temporary slump on the stock markets in August also showed. Profitability in the banking sector is likely to decline somewhat in the coming quarters, as interest margins will decrease due to falling interest rates. The Liechtenstein banking sector remains stable, supported by a solid capital and liquidity base. Against this backdrop, S&P Global once again confirmed the high stability of the Liechtenstein banking sector in its BICRA rating in September.

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