Belgium: GDP growth moderates in Q1; household spending ticks up
May 30, 2018
Comprehensive data released by the Bank of Belgium (NBB) on 30 May puts economic growth in the first quarter at 0.3% in quarter-on-quarter terms and on a seasonally- and working day-adjusted basis, a notch below both the preliminary estimate and analysts’ expectations. Growth at the outset of the year eased from the fourth quarter of last year (Q4 2017: +0.5% quarter-on-quarter, seasonally adjusted) on stalled public spending stalled and a drop in inventories. On an annual basis, growth eased to 1.5% (Q4 2017: +1.9% year-on-year).
Domestic demand remained upbeat, driven by stronger household spending, which rose 0.5% from a quarter earlier (Q4 2017: +0.0% qoq s.a.) amid lower unemployment and stronger consumer confidence. Higher global energy prices, which have an outsize effect on Belgian consumers, likely capped further gains. Holding back growth in the quarter was weaker growth in public spending (Q1: +0.1% qoq s.a.; Q4 2017: +0.3% qoq s.a.). Growth in fixed capital outlays, meanwhile, ticked down to 0.7% (Q4 2017: +0.8% qoq s.a.) on nearly flat growth in business investment, which stagnated despite high utilization rates and offset stronger readings in both residential and public investment. Across the board, fixed investment continued to benefit from cheap financing in the quarter—corroborating upbeat business confidence readings.
In the external sector, growth in both exports and imports eased considerably as concerns over global trade mounted. Exports of goods and services grew just 0.7% from a quarter earlier (Q4 2017: +2.8% qoq s.a.), mostly explained by lukewarm economic data out of the economy’s largest—and mostly European—trading partners. Imports, meanwhile, also eased, expanding 0.5% (Q4 2017: +2.7% qoq s.a.). All told, the external sector contributed 0.2 percentage points to headline growth in the quarter, in line with its contribution in the fourth quarter of last year.
Author: Christopher Thomas, Economist