Belgium: GDP growth records the slowest increase since Q4 2020 in the second quarter
Economic growth edged down in the second quarter, with GDP expanding 0.2% on a seasonally-adjusted quarter-on-quarter basis (Q1: +0.5% s.a. qoq). Q2’s reading marked the softest expansion since Q4 2020.
Household spending growth edged up to 0.7% seasonally-adjusted quarter on quarter in Q2 from a 0.6% expansion in Q1. Public consumption rebounded, growing 0.5% in Q2 (Q1: -2.5% s.a. qoq). Fixed investment was down 1.1% in Q2, contrasting the 1.3% increase in the previous quarter, affected by higher production costs and economic uncertainty.
Exports of goods and services fell 0.6% on a seasonally-adjusted quarterly basis in the second quarter, which contrasted the first quarter’s 1.2% expansion. In addition, imports of goods and services deteriorated, contracting 0.4% in Q2 (Q1: +0.6% s.a. qoq).
On an annual basis, economic growth waned markedly to 3.3% in Q2, from the previous quarter’s 4.9% growth. Q2’s reading marked the slowest expansion since Q1 2021.
Despite the deterioration of external economic conditions, the post-Covid recovery in the service sector drove economic growth in Q2. However, momentum will weaken in Q3 as high prices and delays in the automatic salary indexation mechanism—which, unusually, covers the private as well as the public sector—are currently weighing on household spending. That said, some support to economic activity should come from a vigorous labor market.