Belgian economy holds up well, showing robust growth

The Belgian economy is holding up well for now, outperforming many of its European neighbours, according to new forecasts released by the National Bank of Belgium (NBB) on Monday. In particular, the investments made by companies in recent months have been "spectacular".

The economy is showing robust growth, according to the central bank. Specifically, gross domestic product has grown by 1.5 per cent this year. "This is stronger than European growth and also slightly stronger than our potential growth," said NBB economist Geert Langenus. In the coming years, growth is expected to average a more modest 1.3 per cent.

This growth was supported by household spending - although households are expected to start saving more in 2023 - but mainly by business investment. "This business investment grew by 10 per cent in the second and third quarters. Spectacular," said Langenus. These investments were mostly in automation, digitalisation and greening.

"Business investments grew by 10 per cent in the second and third quarters. Spectacular"

However, Belgium's trade balance with the rest of the world did not fare so well, with the country losing some of its market share. This is due to rising wage costs and energy costs, which are still much higher than in the US, China or India.

Difficult housing market

Household investment in housing is also "particularly negative". A "perfect storm" of higher construction costs, high interest rates, labour shortages and investors exiting the market is weighing on residential investment. Improvement is not imminent.

However, there is good news on the number of jobs being created. After two years of strong growth, 45,000 jobs have been created in 2023. Meanwhile, unemployment is falling to historically low levels.

Inflation, in turn, has fallen from 10.3 per cent in 2022 to 2.3 per cent this year. "It was even negative in October and November," said Langenus. In 2024, inflation should rise again to 4 per cent - a result of the removal of government measures to reduce energy bills - before falling back to 1.8 and 1.4 per cent in 2025 and 2026 respectively.


NBB economist Geert Langenus © BELGA PHOTO JONAS ROOSENS

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