A new study has estimated that the Belgian economy grew by 0.1% over the fourth quarter of 2022, thereby easing fears that Belgium will enter a technical recession by experiencing negative growth in the early months of this year.
According to data published on Monday by the National Bank of Belgium (BNB), the country experienced positive quarterly growth in the service (+0.3%) and building sectors (+0.8%), but negative growth in its industrial sector (-1.0%).
In addition, the BNB found that the economy grew 1.4% relative to the fourth quarter of 2021, and that Belgium's annual real growth in 2022 was 3.1%. It also noted that yearly growth was particularly strong in the country's service sector (+4.2%), but that Belgium's industrial and building sectors experienced negative annual growth (of -0.3% and -0.1% respectively).
The latest figures mean that, according to the BNB, Belgium experienced positive — but diminishing — growth in each consecutive quarter of 2022 (0.6%, 0.5%, 0.2%, and 0.1% from the first to fourth quarters respectively).
Differing estimates
The BNB's figures differ markedly from another recent study by the Institute of Economic and Social Research (IRES) at UCLouvain, which calculated that, after declining 0.3% between September and December 2022, the Belgian economy will shrink a further 0.1% in the first quarter of this year — hence technically pushing the Belgian economy into recession, which is defined as two consecutive quarters of negative growth.
"At the end of 2022, many obstacles to growth persist: high inflation, tighter financing conditions, low confidence and high uncertainty and slowing global economic growth," IRES wrote. "As a result of these, Belgian economic activity should continue to contract at the beginning of 2023."
Whatever the correct estimates might be, there is no doubt that the economic outlook is becoming increasingly bleak not just for Belgium, but for Europe and, indeed, most of the world.
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In early January, the World Bank warned that the world is "perilously close to falling into recession" and forecast that global GDP will increase a mere 1.7% in 2023, down from the 3% it had predicted in June last year.
In particular, the Bank noted that soaring inflation, high interest rates, declining investment, and the continuing impact of Russia's war in Ukraine have left the world economy in a "fragile" condition such that "any new adverse development – such as higher-than-expected inflation, abrupt rises in interest rates to contain it, a resurgence of the Covid-19 pandemic, or escalating geopolitical tensions – could push the global economy into recession."
The Bank's warnings about the dire state of the global economy were recently echoed by the IMF Managing Director Kristalina Georgieva, who predicted a "tough year, tougher than the year we leave behind" in 2023, and forecast that one-third of the world's economy will be in recession this year, including half of all EU Member States.
