The Belgian economy is estimated to have expanded by 1.5% in 2023, slightly more than projected in autumn. Real GDP increased by 0.4% q-o-q in both the third and fourth quarters of the year. Private consumption was resilient in 2023, supported by the automatic indexation of wages and social benefits, which contributed to maintaining household purchasing power. Furthermore, investment recovered strongly, on the back of a rebound in corporate investment.
Going forward, private consumption is expected to expand further, as consumers face lower price increases and employment is still projected to grow. At the same time, the energy transition and the implementation of the Recovery and Resilience Plan (RRP) are set to support gross fixed capital formation. Public investment in infrastructure is also projected to accelerate in the run-up to the 2024 election cycle. By contrast, investment in residential construction is expected to continue to be held back by high financing costs in the short term, before recovering over the forecast horizon amid a moderate easing of financing conditions. After a strong decline in 2023, exports and imports are set to rebound to some extent in 2024 and more vigorously in 2025, in tandem with trading partners' prospects. The contribution of net exports to GDP growth is however forecast to remain negative in 2024 and in 2025, with imports pushed up by private consumption. Overall, GDP growth is forecast to reach 1.4% in 2024 and 1.5% in 2025, unchanged compared to the Autumn 2023 Forecast.
HICP inflation fell to 2.3% in 2023, reflecting the fast transmission of declining wholesale gas and electricity prices to retail prices, along with the effect of government measures to dampen price increases. The withdrawal of these measures is expected to put upward pressure on headline inflation, resulting in a projected increase to 3.5% in 2024. HICP inflation is forecast at 2.3% in 2025 as energy prices are expected to increase at a slower pace. This is lower than in the Autumn Forecast for 2024 and slightly higher for 2025.