Belgium's expected growth figures for 2023 and 2024 have been revised downwards by the country's main economic forecaster, citing a "deterioration in the international environment" as the main reason for the new-found pessimism.
According to a report published on Thursday by the Federal Planning Bureau (FPB), the Belgian economy will grow by just 1.0% in 2023 before expanding by 1.3% in 2024: 0.3 percentage points fewer each year than previously forecast. In 2022, the Belgian economy grew roughly three times faster (3.2%).
The study also predicted that Belgium's inflation rate will fall from 4.4% this year to 4.1% in 2024: 0.8 percentage points higher than formerly anticipated and more than twice the European Central Bank's (ECB) 2% target rate.
Better than (some of) the rest
Despite the downward revision, Belgium's expansion this year is expected to remain slightly above the eurozone's 0.7% average growth rate.
The FPB noted that the country's relatively resilient service sector and virtually unique system of government-mandated wage indexations have allowed it to offset a precipitous decline in exports over the past year.
"Belgium, unlike Germany and the Netherlands, was able to avoid a recession thanks to the importance of its service sector and the automatic income indexations that supported purchasing power," the report noted.
It added: "Economic growth will remain weak in Europe in the second half of 2023. Exports are experiencing a slowdown in global trade, due in part to a reorientation of consumer interest in favour of domestic services after the Covid-related restrictions."
Increasing pessimism
The FPB study is just the latest of several reports that have painted a bleak picture of the Belgian economy over the last few weeks.
According to an analysis by BNP Paribas Fortis, Belgium's largest bank, Belgium ranks 17th out of 27 EU Member States in the 'Future Proof' index, which assesses countries' long-term economic resilience.
The report noted that Belgium's relatively poor transportation network, low labour market participation and high levels of public spending pose a significant threat to the country's future economic health.
"The problem with high public debt is that there is zero room for manoeuvre in the event of unexpected events," said BNP Chief Economist Koen De Leus. He added that Belgium is "unique" insofar as it combines a "low employment rate with a much higher than average sickness rate".
Adding to these concerns is Belgium's rapid recent decline in industrial production, which fell by 3.0% in June (the most recent month for which there is available data): the third consecutive monthly decrease.
Viewed year-on-year, Belgium's industrial slump was even more striking, with output down by 7.6% compared to June 2022: the third largest annual decrease in the EU, after Bulgaria and Estonia.
