Belgium: Economy contracts in third quarter for first time in over two years
December 7, 2011
In the third quarter, GDP fell a seasonally and calendar-adjusted 0.1% over the previous quarter, according to revised data published by the National Bank of Belgium on 7 December. The print was revised down from the flat estimate previously released on 28 October and marked the first contraction in economic activity since the economy came out of recession in the second quarter of 2009. The quarterly contraction contrasted the 0.4% increase observed in the second quarter. Compared to the same period last year, GDP grew 1.7% in the third quarter, which was slower than the 2.2% expansion in the second quarter. The quarterly contraction was broad-based, with the exception of government consumption, which registered an improvement. Private consumption contracted 0.2% in the third quarter, which contrasted an expansion of the same magnitude in the previous quarter. Gross fixed investment swung from a 2.7% expansion in the second quarter to a 0.6% contraction in the third quarter. In contrast, government spending tripled to a 0.6% expansion in the third quarter (Q2: +0.2% quarter-on-quarter). The external sector also deteriorated, with exports of goods and services declining 1.0% over the previous quarter (Q2: -0.4% qoq), while imports fell a more moderate 0.3% (Q2: -0.3% qoq). Consequently, the net contribution to overall economic growth deteriorated from minus 0.1 percentage points in the second quarter to minus 0.6 percentage points in the third quarter. Meanwhile, at the sector level the contraction was broad-based in the third quarter. The Central Bank expects the economy to grow 2.6% this year, before slowing to 2.2% in 2012.
Author: Ricardo Aceves, Senior Economist