Belgium Economic Forecast

Belgium Economic Outlook

June 30, 2020

The economy contracted even more sharply in the second quarter, after shrinking at the fastest pace on record in the first quarter due to Covid-19. Industrial production crashed by nearly a quarter in April as the full weight of social distancing measures and closure of non-essential activities took hold. Moreover, household spending and fixed investment are set to have fallen at a steeper rate as suggested by record-low business confidence and depressed consumer sentiment in the quarter. In politics, the special powers assigned to the emergency government of Prime Minister Sophie Wilmès are set expire at the end of June unless Parliament extends them to the end of September. Meanwhile, discussions to form a federal government are ongoing and the risk of new elections is elevated given the plethora of political parties remain at loggerheads over key policy issues.

Belgium Economic Growth

The economy is set to contract this year as a result of the health crisis. Fixed investment is likely to fall on depressed sentiment and the uncertain length of the pandemic, while downbeat external demand and falling tourism should weigh on exports. Meanwhile, the fiscal deficit is set to jump this year, putting pressure on politicians to curtail spending ahead. FocusEconomics analysts see the economy contracting 7.5% in 2020, which is down 0.2 percentage points from last month’s forecast. In 2021, they see it expanding 4.9%.

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Belgium Facts

Value Change Date
Bond Yield0.100.15 %Dec 31
Exchange Rate1.120.65 %Dec 31

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