Belgium: Economic activity slumps at record pace in Q1
May 29, 2020
GDP shrank 3.6% on quarter-on-quarter seasonally-adjusted basis in the first quarter, contrasting Q4 2019’s 0.5% expansion and marking the sharpest contraction on record.
Household spending fell to 6.5% in Q1, marking a record drop (Q4 2019: +0.5% quarter-on-quarter seasonally-adjusted). Public spending dropped 3.1% in Q1 (Q4 2019: +0.5% qoq s.a.). In addition, fixed investment slid 3.7% in Q1, compared to the 0.5% expansion logged in the previous quarter.
Exports of goods and services fell 3.8% in the first quarter, contrasting Q4 2019’s 0.9% expansion. Meanwhile, imports of goods and services declined 4.7% in Q1 (Q4 2019: +1.1% qoq s.a.).
On an annual basis, economic activity dropped 2.5% in Q1, contrasting Q4 2019's 1.3% growth.
The Covid-19 crisis is expected to push the economy into recession this year. Containment measures, rising unemployment and deteriorated sentiment will hamper domestic demand, while exports look set to shrink on muted global demand and diminished tourism. Political risks also cloud the outlook.
Author: Nicolás J. Aguilar, Economist