Belgium: GDP growth falls to over one-year low in Q4
Economic growth inches down in Q4: According to a preliminary reading, GDP growth waned to 0.2% on a calendar and seasonally adjusted quarter-on-quarter basis in Q4 2024 (Q3: +0.3 qoq s.a.), marking the worst reading since Q3 2023. On an annual basis, economic growth moderated to 1.1% in Q4, compared to the previous quarter’s 1.2% increase.
Deceleration in the services sector drives moderation: Early estimates suggest that the quarterly moderation was due to weaker momentum in the services sector, which grew by 0.2% (Q3: +0.4% qoq s.a.). Meanwhile, the decline in industrial activity remained at Q3’s 0.1%. More positively, growth in the construction sector strengthened to 0.7% from Q3’s 0.2%.
GDP growth to stabilize ahead: Sequential GDP growth should remain close to Q4’s level through the end of the year: Domestic demand should benefit from lower interest rates and inflation, while the external sector will take a hit from protectionist U.S. policies. In turn, full-year GDP growth will hover near 2024’s level in 2025 as a whole, with a robust expansion in private spending and accelerating fixed investment set to broadly offset softer momentum in public spending—due to fiscal consolidation efforts—and persistently weak exports. Downside risks stem from further prolongation of government negotiations that could result in withheld disbursements of EU funds and a strict austerity program imposed on the country as part of the European Commission’s drive to curb Belgium’s fiscal deficit.
Panelist insight: EIU analysts said:
“Belgium’s export-oriented economy (goods and services exports accounted for nearly 87% of GDP in 2023) will still feel the impact of sluggish external expansion through weak export growth and a loss of competitiveness due to wage indexation. […] Nevertheless, automatic wage indexation and lower inflation will continue to support consumer spending power. Continued monetary easing in the euro zone will result in a gradual pick-up in domestic growth, leading to stronger real GDP growth from 2025. Looser financial conditions will also support investment growth.”