Belgium Economic Forecast

Belgium Economic Outlook

October 23, 2018

Economic activity likely remained subdued in Q3, after growth undershot the Eurozone average in the first half of the year. After rising only mildly in Q2, retail sales grew at an even softer pace in July–August while the unemployment rate, although still low by historical standards, climbed to a near one-year high. This, alongside households turning pessimistic on average in Q3, largely due to their downbeat expectations over their financial situation ahead, hint at soft consumer spending dynamics in the quarter. On the external front, faster growth of imports than that of exports in August led the trade balance to record the smallest monthly surplus in over a year and half, contributing to a considerable reduction in the year-to-date surplus compared to last year. Meanwhile, the government unveiled its 2019 draft budget on 15 October setting a slower pace for achieving the structural deficit targets presented to the European Commission back in April, to which EU authorities could request recalibration.

Belgium Economic Growth

Growth is seen broadly stable next year on the back of strong domestic demand. Particularly, robust household spending, underpinned by continued employment gains and modest wage growth, is expected to be the main driver of the expansion. A key downside risk to the outlook stems from the external environment, whereby potential spillover effects from the escalating trade conflict between the U.S. and China could dent export activity, given the highly open nature of the Belgian economy. Met the why particular analysts project growth of 1.6% in 2019, which is unchanged from last month’s forecast, and 1.6% again in 2020.

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Belgium Facts

Bond Yield0.800.15 %Nov 15
Exchange Rate1.130.65 %Nov 15
Stock Market3,526-0.23 %Nov 15

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