Belgium GDP Q2 2020

Belgium

Belgium: Economy enters recession in Q2

August 31, 2020

GDP shrank 12.1% on a seasonally-adjusted quarter-on-quarter basis in Q2, following Q1’s 3.5% decline and marking the sharpest contraction on record. The economy was hit hard by the pandemic and related restrictive measures.

Household spending plunged 12.7% in Q2, marking a record drop (Q1: -6.4% s.a. qoq), while public spending fell 8.3% (Q1: -3.5% s.a. qoq). Moreover, fixed investment collapsed, diving 18.2% in Q2, compared to the 3.9% decrease clocked in Q1.

Exports of goods and services declined 13.3% in the second quarter, after the first quarter’s 1.7% contraction. Meanwhile, imports of goods and services declined 13.9% in Q2 (Q1: -2.5% s.a. qoq).

On an annual basis, economic activity dropped 14.4% in Q2, down from Q1's 2.4% decrease.

There should be some recovery throughout the rest of the year. However, political uncertainty and a resurgence of Covid-19 cases pose downside risks. Commenting on the outlook, Daniela Ordonez, chief French economist at Oxford Economics, stated: “We continue to expect a marked post-lockdown rebound in Q3, but the pace should then cool as the ongoing political deadlock will prevent meaningful fiscal support to be deployed swiftly. […] Risks remain on the downside as the threat of a second wave of infections may be looming.”

FocusEconomics Consensus Forecast panelists project GDP to fall 8.0% in 2020, which is up 0.1 percentage points from last month’s projection. For 2021, the panel sees economic growth of 5.5%.


Author:, Junior Economist

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Belgium GDP Q2  20 20

Note: Quarter-on-quarter changes of seasonally-adjusted GDP in %.
Source: National Bank of Belgium (NBB) and FocusEconomics Consensus Forecast.


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