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Economy and Finance

Economic forecast for Belgium

Economic growth is set to slow down in 2022 after rebounding by 6.2% in 2021. The Omicron variant wave had a limited impact on the economy in the first quarter of 2022 as the remaining restrictions on activity were quickly lifted, leading to real GDP growth of 0.5% in Q1-2022. Similarly, employment experienced strong growth at the beginning of 2022.

Last update : Summer 2022 Economic Forecast (14/07/2022)

Indicators2020202120222023
GDP growth (%, yoy)-5,76,22,31,3
Inflation (%, yoy)0,43,29,42,9

Real GDP growth is forecast to reach 2.3% in 2022, supported by a strong carry-over from 2021 and the better-than-expected figures of the first quarter. In the second quarter of 2022, the quarterly growth rate is projected to drop, as the economic situation deteriorates, before gradually increasing back to around 0.5% over the forecast horizon. In 2023, real annual GDP growth is expected to reach 1.3%.

The high level of inflation and the decrease in consumer confidence are expected to curb the expansion of household consumption. Still, automatic indexation of wages and social benefits are set to support purchasing power, especially in 2023, when inflation is projected to significantly decrease.

Uncertainty, tighter financing conditions, higher cost pressures from input prices and wages, as well as supply side constraints, are expected to weigh on investment. At the same time, the RRF and the energy transition efforts are forecast to support gross fixed capital formation. A less favourable external environment is set to weigh on imports and exports this year. Net exports are expected to contribute negatively in 2022, as tourism abroad resumes.

Headline inflation is forecast to reach an excep-tionally high level of 9.4% in 2022. This is mainly due to the sharp increase in energy prices, which are transmitted quickly to retail prices. Food prices and core inflation are also pushing headline inflation up. The gradual fall in energy prices is forecast to lead to a decline in headline inflation to 2.9% in 2023.