The Belgian economy grew at just half the rate of other developed countries last quarter, as falling industrial production and persistently high energy prices continue to slow the country's rate of expansion.
According to report published on Monday by the Organisation for Economic Co-operation and Development (OECD) – a group of mostly rich countries – the Belgian economy grew by just 0.2% in the second quarter of this year, down from 0.4% in the previous quarter.
By contrast, the economies of the 38 OECD member countries expanded on average by 0.4% from April to June this year, a slight decrease compared to the previous quarter's 0.5% rate.
Despite its anaemic growth, Belgium fared better than several of its neighbours last quarter, including the Netherlands (-0.3%) and Germany (0.0%). France, however, expanded two-and-a-half times (0.5%) faster than Belgium.
Risky business
The OECD report comes just weeks after the group published its latest Economic Outlook Note for Belgium, which offered a starkly pessimistic appraisal of the nation's economy.
In particular, the OECD heavily criticised Belgium's system of government-mandated wage indexations, claiming that it poses one of the "main risks" to the country's economic outlook by potentially inducing "more persistent inflation". It also condemned Belgium's growing fiscal deficit and high levels of government debt.
"Inflation, tighter financing conditions, and high uncertainty will drag on domestic growth, while weak global trade prospects will weigh on net exports," the report noted. "The main risks include more persistent inflation due to wage indexation and a consequent loss of export competitiveness."
In addition, the OECD painted an unremittingly bleak picture of Belgium's longer-term economic prospects: "The fiscal deficit will increase in 2023 and remain large in 2024. In the longer term, measures to ensure the sustainability of public finances will be necessary given the high public debt."
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Belgium's low growth rate is also doing little to ease persistent concerns over the country's potential deindustrialisation. According to a recent report by Eurostat, the EU's official statistics office, Belgian industrial output fell by 3.0% in June compared to May: the third consecutive monthly decrease, and the fourth largest decline in the EU after Malta (3.3%), Finland (3.3%) and Sweden (5.3%).
Eurostat's findings are in line with the repeated warnings in recent months by analysts and business leaders of the dangers posed by high energy prices and protectionist US legislation to the European economy.
Earlier this year, Bernard Delvaux (CEO of major Belgian construction company Etex) warned that without urgent government intervention an increasing number of European companies will likely relocate to the US or Asia to take advantage of lower energy costs – a possibility he described as "very dangerous for Europe".
