Belgium’s economic growth is set to decelerate in 2026, mainly due to weakening private consumption. GDP growth is expected to rebound in 2027, supported by improving domestic demand. Inflation is forecast to rise in 2026, driven by higher energy prices stemming from the conflict in the Middle East, before decreasing in 2027 due to lower price pressures for energy. As a result of the fiscal consolidation measures, a stabilisation in the general government deficit is projected in 2026. However, the deficit is expected to rise again in 2027 due to higher defence and interest expenditure. The forecasted high levels of deficit translate into a further increase in the already high government debt-to-GDP-ratio.
| Indicators | 2025 | 2026 | 2027 |
|---|---|---|---|
| GDP growth (%, yoy) | 1.0 | 0.7 | 0.9 |
| Inflation (%, yoy) | 3.0 | 3.4 | 2.6 |
| Unemployment (%) | 6.2 | 6.6 | 6.5 |
| General government balance (% of GDP) | -5.2 | -5.2 | -5.4 |
| Gross public debt (% of GDP) | 107.9 | 110.5 | 112.8 |
| Current account balance (% of GDP) | -2.3 | -2.6 | -2.6 |
Economic growth set to decelerate in 2026
The Belgian economy grew by 1% in 2025, mainly driven by robust private consumption. However, investment slowed down and the contribution of net exports remained negative. Real GDP increased by 0.2% in the first quarter of 2026. However, decreasing consumer confidence points to a slowdown in Q2.
Private consumption is expected to weaken over the forecast horizon, reflecting reduced purchasing power stemming from higher inflation and lower growth in social benefits. The saving rate is set to remain stable at 12% of disposable income in 2026 and 2027. Investment is projected to grow modestly, weighed down by tighter financial conditions, uncertainty stemming from geopolitical tensions and the surge in energy prices. Household investment is expected to decline further in 2026, as building permits continue their downward trend. Exports are expected to slightly recover as of 2026. At the same time, imports are also projected to pick up, in particular due to defence-related deliveries. As a result, net exports are set to continue contributing negatively to GDP also in 2027. Overall, real GDP growth is projected to decelerate to 0.7% in 2026, before increasing to 0.9% in 2027.
Employment expected to gradually rise
Employment is forecast to increase gradually over the forecast horizon, underpinned by reforms aimed at extending careers, through the pension reform, notably the bonus-malus system, and reintegrating long-term sick employees into the labour market. Unemployment is projected to slightly increase in 2026 before declining in 2027, as the two-year cap on unemployment benefits duration is expected to increase the number of active job-seekers. Wage growth is set to moderate over the forecast horizon, mainly due to more stable inflation compared to previous years and the cap on the indexation of higher wages.
Inflation set to edge up in 2026
Headline inflation is projected to rise from 3% in 2025 to 3.4% in 2026. Energy inflation is expected to rise as a result of the conflict in the Middle East. Services inflation is set to remain elevated, fuelled by rising prices for service vouchers, higher university tuition fees and VAT increases on certain products. Headline inflation is projected to ease to 2.6% in 2027 as energy and non-energy industrial goods prices are expected to decelerate. However, this slowdown is forecast to be partly offset by higher services prices.
High deficits to remain despite expenditure consolidation
In 2025, the general government deficit increased significantly to 5.2% of GDP, up from 4.4% in 2024. This was driven by a strong decline in revenues, mainly from income and wealth taxes, in combination with higher expenditure in particular on defence and social benefits.
The deficit is projected to stabilise at 5.2% of GDP in 2026 mainly due to measures taken by the federal and regional governments to contain spending and increase revenue. Higher expenditure on defence and interest payments is partly offset by reductions in current spending on social benefits, subsidies and public sector wages. The decrease in current spending stems from a range of reforms and consolidation measures targeting pensions and labour market reintegration. At the same time, revenue as a percentage of GDP is projected to increase, rebounding from its 2025 low, as a consequence of fiscal measures on VAT, capital gains tax and financial sector taxation.
In 2027, the deficit is forecast to widen again to 5.4% of GDP, driven by higher expenditure. The decline in other current revenue and capital transfers following the end of the RRF is mirrored by lower expenditure. On the revenue side, various measures broadly offset each other. In terms of expenditure, the expected increase in defence spending and interest payments is only partially offset by a decline in intermediate consumption and public sector wages. The latter reflects slower growth in public sector employees and the partial wage indexation. Defence spending is projected to increase gradually from 1.4% of GDP in 2025 to 1.8% in 2027, taking into account the delivery timelines for military equipment.
General government gross debt stood at 107.9% of GDP at the end of 2025. The structurally high general government deficits are the main driver of the projected increase in the debt-to-GDP ratio to 112.8% in 2027.