Belgium: Belgian economy picks up steam in Q4
According to a second estimate released by the Bank of Belgium (NBB) on 28 February, GDP expanded 0.5% in quarter-on-quarter terms in the fourth quarter of 2017, confirming the preliminary estimate released on 29 January. In annual terms, GDP grew 1.9% in Q4, accelerating from Q3’s 1.6% expansion. Full-year growth accelerated from 1.5% in 2016 to 1.7% in 2017, the highest expansion since 2011.
The quarter-on-quarter acceleration was driven by robust performance external sector. Exports of goods and services swung from a 0.6% qoq contraction in Q3 to a 2.0% expansion in Q4. The rebound was driven by increased demand from Belgium’s trading partners in the European Union, attesting to the economic upswing in the region. Imports expanded 1.6% in the fourth quarter, contrasting the 0.7% decline in the preceding quarter. As exports grew at a faster pace than imports, the external sector’s contribution improved from 0.1 percentage points to 0.3 percentage points.
The domestic economy had a muted performance in Q4, and its contribution to growth declined from 0.5 percentage points in Q3 to 0.3 percentage points. Quarter-on-quarter growth in private consumption halved from 0.2% in Q3 to 0.1% in Q4, despite declining unemployment and high consumer confidence. Growth in fixed investment plunged from 1.2% qoq in Q3 to a flat reading in Q4. The sharp deceleration reflected a contraction in business investment, which more than offset a sharp expansion in investment by the public administration. Public consumption growth was the only subcomponent to accelerate, expanding 0.7% (Q3: +0.4% quarter-on-quarter).
The economy is expected to grow at a broadly stable pace in the upcoming years. The strong economic momentum observed in the Euro area will support robust growth of the important external sector. Furthermore, declining unemployment, tightening labor market and cheap borrowing costs in the European Union should boost the Belgian domestic economy.