Belgium: Economy grows less than initially estimated
December 8, 2010
In the third quarter, gross domestic product increased 0.4% over the previous quarter in seasonally adjusted terms, according to revised data published on 8 December. The initial estimate from October had GDP growing 0.5%. The third quarter increase was down from a 1.0% expansion tallied in the second quarter. On an annual basis, GDP expanded 2.0% in the third quarter (Q2: +2.6% year-on-year). The moderate third quarter reading was mainly the result of a deceleration in domestic demand. Private consumption accelerated to a 0.4% quarter-on-quarter increase (Q2: +0.3% quarter-on-quarter), while government consumption increased 0.3% in the third quarter (Q2: +0.4% qoq). Gross fixed capital formation decelerated from a 1.0% expansion in the second quarter to 0.3% increase in the third quarter. In addition, a less favourable development in inventories contributed to the slowing in domestic demand. The net contribution from the external sector improved over the second quarter, as exports decelerated less markedly than imports. Exports of goods and services expanded 0.8% quarter-on-quarter, well below the 3.7% expansion observed in the previous quarter. In contrast, imports contracted 0.3% over the second quarter, contrasting the 3.2% expansion tallied in the April-June period. As a consequence, the net contribution from the external sector to overall growth improved from 0.5 percentage points in the second quarter to 0.9 percentage points in the third. At the sector level, the third quarter deceleration was broad-based, reflecting deteriorations in the industrial sector (Q2: +2.0% qoq; Q3:+0.7% qoq) and in services (Q2: +0.5% qoq; Q3: +0.3% qoq). Only agriculture remained unchanged over the previous quarter, posting a flat figure. The Central Bank expects economic activity to grow 2.1% this year. For 2011, monetary authorities see the economy expanding 1.8%.
Author: Ricardo Aceves, Senior Economist