Belgian economy set for steady growth of around 1 per cent, National Bank says
Belgian economic growth is expected to remain stable at around 1 per cent in the coming years, according to new forecasts by the National Bank of Belgium (NBB). The bank forecasts economic growth of 1.1 per cent this year. Growth is then expected to ease slightly to 1 per cent in 2026 and 2027, before edging up to 1.2 per cent in 2028.
The impact of the measures announced by the federal government in late November, including targeted increases in VAT and excise duties, as well as the capping of automatic wage indexation, will only have a limited impact on economic growth. According to the NBB, they mainly affect inflation and labour costs.
While growth is predicted to remain stable, the NBB expects its composition to change. Household consumption, the main driver of growth in 2025, is set to decline due to government measures that weigh on purchasing power, such as limiting indexation and restricting unemployment benefits over time.
Still, household consumption is unlikely to fall as sharply as purchasing power will, the NBB says: the cap on indexation mainly affects higher income families, which are more likely to adjust their savings behaviour than their consumption. Private investment, such as company investments and house renovatoins, is expected to play a larger role in driving growth, while public investment is projected to decline.
Mixed labor outlook
The labour market outlook remains mixed. The National Bank expects around 135,000 jobs to be created between 2025 and 2028, but the unemployment rate is forecast to remain broadly stable at around 6 per cent.
Only around 20 per cent of the long-term unemployed who lose their benefits are expected to find work in the short term: a significant share of long-term unemployed are over 50, low-skilled or based in Wallonia, where vacancy rates are lower.
Lastly, the NBB sees room for real wage increases in 2027 and 2028. Due to Belgium's wage norm law (which limits average labor cost increases to maintain competitiveness with neighboring countries) and its system of automatic wage indexation, there was no room for any additional wage increases.
But the NBB now sees that the labour cost gap with neighbouring countries is narrowing faster than expected. Under current assumptions, this could allow for a wage margin of around 0.4 per cent, the bank said.
NBB governor Pierre Wunsch. © BELGA PHOTO JASPER JACOBS
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