Belgian Federal Planning Bureau expects inflation to halve in 2023

Despite the slowdown of the Belgian economy, the Federal Planning Bureau (FPB) expects that a recession can be avoided this year. The FPB now assumes the economy to grow by 1 per cent in 2023. Last year, growth reached 3.1 per cent.

The FPB is more optimistic than before, with the growth forecast for 2023 being 0.5 percentage points higher. The Belgian economy appears to be holding up better than expected and concerns about energy supplies are less pronounced.

Annual inflation is expected to halve from 9.6 per cent in 2022 to an average of 4.5 per cent this year. That includes a reduced VAT rate of 6 per cent and an increase in federal excise duty. The FPB expects the pivot index to be exceeded in August 2023 and February 2024.

Household purchasing power fell by 1.6 per cent last year, due to high inflation and the deferred wage indexation for many workers. This year, the Planning Bureau expects it to recover by 4.2 per cent.

Finally, while 100,000 jobs were created last year, the FPB expects only 38,000 to be created this year. The employment rate is therefore expected to rise only by 0.3 percentage points, to 72.3 per cent.