Consumer and business confidence in Belgium rose for the second consecutive month in December, according to two recent surveys by the National Bank of Belgium (NBB).
The NBB reported improvements in business sentiments across all sectors except for trade, with manufacturing, construction, and especially services all registering noticeable upticks. It attributed the latter upswing mostly to an improved "outlook for both firms' own activity and general market demand."
Similarly, the bank noted that the increase in consumer confidence was largely a result of "more optimistic expectations" about the general Belgian economy, and in particular a more positive assessment of households' future ability to save.
Consumers' perceptions of households' general financial situation also recorded a modest increase, while expectations about Belgium's unemployment rate remained stagnant.
Don't trust the experts?
Interestingly, businesses' and consumers' expectations appear to be largely at odds with professional economists' own recent predictions regarding the state of the Belgian economy.
In its most recent report, the Federal Planning Bureau (FPB), Belgium's main economic forecaster, downwardly revised the country's expected growth figures for 2023 and 2024, citing a "deterioration in the international environment" as the main reason for the new-found pessimism.
More specifically, the FPB predicted that 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.
The FPB also predicted that Belgium's inflation rate will fall only slightly 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.
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Similarly, another recent report by the International Monetary Fund (IMF) predicted that "weaker external environment and slowing domestic demand" mean that the Belgian economy will expand by just 1% this year, down from 3.2% in 2022. It also forecast that "in the medium-term" growth will remain at just 1.25%: barely half the country's average annual rate of expansion over the past three decades.
Like the FPB, the IMF also forecast that inflation will remain "above 4%" next year. It attributed the elevated price pressures "mostly" to the "fading effects from energy price support measures" introduced after Russia's full-scale invasion of Ukraine in February last year.
Even more worryingly, the fund noted that core inflation, which strips out the impact of energy and volatile food prices, will also remain extremely high, reaching 7.5% this year before dropping to just 3.75% in 2024.
