Belgium’s economic growth is expected to slow down in 2025, mainly due to high global uncertainty and decreased exports. GDP growth is projected to increase slightly in 2026 and in 2027, supported by improving external demand and investments. Inflation is forecast to decrease in 2025 and in 2026, driven by lower price pressures for industrial goods and energy before rising in 2027 following an increase in energy prices. Based on currently known policies, the general government deficit is projected to increase over the forecast horizon driven by defence and interest expenditure. As a result, the government debt is expected to continue its upward trend.
| Indicators | 2025 | 2026 | 2027 |
|---|---|---|---|
| GDP growth (%, yoy) | 1.0 | 1.1 | 1.3 |
| Inflation (%, yoy) | 2.8 | 1.8 | 2.0 |
| Unemployment (%) | 6.0 | 6.2 | 6.1 |
| General government balance (% of GDP) | -5.3 | -5.5 | -5.9 |
| Gross public debt (% of GDP) | 107.1 | 109.9 | 112.2 |
| Current account balance (% of GDP) | -0.6 | -0.6 | -0.6 |
Economic activity set to slow in 2025
GDP growth remained robust at 0.4% q-o-q in the first quarter of 2025, then fell to 0.2% in the second quarter due to trade uncertainty before reaching 0.3% in the third quarter.
Domestic demand is expected to slow down in 2025, but grow slightly faster in 2026 and 2027, supported by investment. Muted employment growth, unemployment benefit cuts and a rebound in inflation in 2027 are projected to weigh on private consumption over the next two years. Capacity utilisation is below its historical level and mortgage interest rates remain relatively high, leading to a decline in gross fixed capital formation in 2025. However, it is expected to rebound in 2026 and 2027 due to better financing conditions. Construction is set to expand and reduced uncertainty in the external environment is expected to encourage equipment investment. The introduction of US tariffs negatively affects Belgian exports, with the US being Belgium's fourth-largest export market, although their impact was limited in 2025 due to frontloaded exports. Imports are set to decrease less than exports, resulting in a negative contribution of net exports to growth in 2025. Exports are expected to rebound in 2026 and 2027, supported by recovering cost competitiveness as wage growth moderates. Import demand is also set to pick up, but the contribution of net exports to GDP growth is projected to improve up to 2027. Overall, economic activity is forecast to grow by 1.0% in 2025, followed by a gradual recovery of 1.1% in 2026 and 1.3% in 2027. A potential downside risk is a slower-than-expected EU demand recovery.
Unemployment set to increase in 2025
Employment growth eased to 0.3% in 2024, mainly due to employment declines in the industrial sector. Although modest growth is expected over the forecast horizon, a pick-up is projected, driven by an investment recovery and unemployment benefit and pension reforms. The unemployment rate is set to rise to 6.0% in 2025 and 6.2% in 2026, as a short-term consequence of labour market and pension reforms, before decreasing slightly in 2027. Wage growth is set to ease gradually as labour supply increases.
Gradual decrease of inflation
Headline inflation is projected to decline from 4.3% in 2024 to 2.8% in 2025. Goods inflation is set to slow significantly, supported by decreasing energy commodity prices and low imported inflation. However, service inflation is projected to remain more elevated in 2025, driven by the increase in service vouchers and public transport prices. Inflationary pressures are projected to ease further to 1.8% in 2026, with slower price growth expected across all components. In 2027, the introduction of ETS2, if not delayed, is expected to lead to an increase in energy prices, causing headline inflation to rise to 2.0%.
New government measures offset by increasing defence and interest expenditure
In 2025, the deficit is expected to increase to 5.3% of GDP from 4.4% in 2024. Ageing costs (+0.2% of GDP compared to 2024), mainly pension and healthcare, interest payments (+0.2% of GDP), and defence (+0.1% of GDP) are expected to drive expenditure up. The latest defence projections show a gradual rise in expenditure towards 2% of GDP in 2027, taking into account the delivery time of military equipment. In addition, government revenue is expected to decline (-0.3% of GDP), specifically in taxes on production and imports which are negatively affected by discretionary measures mainly at the regional level.
The 2026 projections include the expected impact from federal and regional measures that were decided by the end of October 2025. In 2026, the deficit is forecast to reach 5.5% of GDP due to defence expenditure increasing by 0.3% of GDP. In addition, higher interest expenditure (+0.2% of GDP) is expected because of the rising debt level and higher refinancing rates. The implementation of consolidation measures at the federal and regional level is projected to stabilise social benefits expenditure at 25.8% of GDP. Revenue as a percentage of GDP is projected to remain broadly stable in 2026, supported by taxes on products and imports and income and wealth. As a result, the primary balance is set to remain stable.
In 2027, the deficit is forecast to widen to 5.9% of GDP, driven by a fall in revenue (0.3% of GDP), mainly due to a decrease in other current revenue and capital transfers, and a small increase in expenditure (0.1% of GDP). On the expenditure side, higher defence expenditure (+0.2% of GDP) and interest payments (+0.2% of GDP) are compensated by an expected decline in social benefits (-0.2% of GDP), following the adoption of more stringent rules to have access, and in employee compensation (-0.1% of GDP) due to a slowdown in the growth of both the number of employees and public sector wages.
General government gross debt stood at 103.9% of GDP at the end of 2024. The persistence of high general government deficits explains the projected rise to 112.2% in 2027.