2024 was marked by uncertainty and upheaval, with tensions rising around Europe and new challenges emerging within the Union. At the heart of this, Belgium has been rocked by elections that left the country without a government to act on policy decisions.
2025 will be a pivotal year for Europe as it seeks stability and security in a changing global order. The Brussels Times has asked industry experts what developments they foresee and how life in Belgium will be affected.
Éric Dor is a professor in economics at the IÉSEG School of Management in Paris.
What is the biggest challenge for 2025?
From a domestic point of view, the biggest challenge for Belgium is to reach a Federal Government agreement that will reduce the public deficit and lower public debt as a percentage of GDP, while including measures to increase the employment rate.
What are the economic prospects for Belgium this year?
Real GDP growth should be about 1.2% in 2025, according to the base scenario. This is a little higher than real growth in 2024.
The main driver of growth in 2025 should be household consumption expenditure. The rate of growth of government consumption should be very small and public investment will probably decrease. Business investment is expected to grow moderately but, like in 2024, much less than in 2023.
Household investment should recover after decreasing in 2023 and 2024 but its growth rate will be very small. Meanwhile, exports should pick up but less than imports, so that the contribution of external trade to GDP growth is negative.
Average inflation in 2025 will be close to 3%, higher than the eurozone average. Employment will probably rise very slightly, with the unemployment rate remaining unchanged. Until a new government programme is negotiated, the public deficit will likely remain about 5% of GDP.
What does Belgium most need to improve this year?
The authorities should conduct policies aiming at increasing the employment rate which is much too low in certain areas of the country. Also the sustainability of the public debt trajectory should be improved.
Will things get better or worse this year?
It depends on several factors within Belgium, as well as external shocks that could impact activity. Seeing as the Arizona parties accept the need to fix Belgium's excessive deficit and debt problems, it can reasonably be expected that public finances will improve.
But there are major external challenges that threaten to rock the economy. If the new US administration really implements its protectionist programme by raising duties on European imports, Belgian exports could be depressed, reducing GDP growth and employment.
How will this impact households?
Provided the disinflationary trend continues, interest rates should come down even more, which will favour people looking to borrow to buy houses. By contrast, households that are saving will receive lower interest rates on their bank accounts.
What are the biggest developments to watch for?
Most significant will be how the next Federal Government reduces the public deficit and sets the national debt on a course that is compatible with the European stability pact.
The impact of the US protectionist policy on external trade and inflation is also a major concern.
