Belgium GDP Q3 2020

Belgium

Belgium: Second release confirms a rebound in activity in Q3, but Q4 prospects are grim

November 30, 2020

A second release confirmed that the economy rebounded in the third quarter, growing 11.4% on a seasonally-adjusted quarter-on-quarter basis thanks to the easing of Covid-19 restrictions at home and abroad, after contracting 11.8% in Q2 at the height of the pandemic. On an annual basis, economic activity fell 4.5% in Q3, softening from Q2's 13.9% collapse.

Looking at the details of the release, the upturn was led by recovering domestic activity. In seasonally-adjusted quarter-on quarter terms, private consumption soared 16.4% (Q2: -11.6% s.a. qoq) and fixed investment surged 10.7% (Q2: -17.7% s.a. qoq). Moreover, government consumption grew 8.3% after contracting 5.9% in the previous quarter. Externally, exports rebounded, climbing 13.3% (Q2: -14.2% s.a. qoq) and imports expanded 14.3% (-14.3% s.a. qoq), leading to a negative contribution to growth from the external sector.

Despite the rebound, the recovery may well be short-lived as a new wave of Covid-19 cases led to the imposition of a fresh lockdown on 2 November. On the outlook, Philippe Ledent, senior economist at ING, commented: “The Belgian economy is now facing a new (very strong) wave of the pandemic [and as a result] will suffer another negative shock in the fourth quarter. Thereafter, depending on the evolution of the pandemic, it could return to growth in the first quarter of next year. However, we will have to wait for the arrival and wide diffusion of a vaccine to see the situation really improve.”

Despite the rebound, the recovery may well be short-lived as a new wave of Covid-19 cases led to the imposition of a fresh lockdown on 2 November. On the outlook, Philippe Ledent, senior economist at ING, commented: “The Belgian economy is now facing a new (very strong) wave of the pandemic [and as a result] will suffer another negative shock in the fourth quarter. Thereafter, depending on the evolution of the pandemic, it could return to growth in the first quarter of next year. However, we will have to wait for the arrival and wide diffusion of a vaccine to see the situation really improve.”

FocusEconomics Consensus Forecast panelists project GDP to increase 4.2% in 2021, which is down 0.8 percentage points from last month’s projection. For 2022, the panel sees economic growth of 3.4%.


Author:, Junior Economist

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Belgium GDP Q3  20 20 1

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


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