GDP in Belgium

Belgium - GDP

GDP growth accelerates in the second quarter

A second estimate confirmed that GDP growth accelerated on a seasonally-adjusted quarter-on-quarter basis in the second quarter, expanding 1.7% (previously reported: +1.4% s.a. qoq) and gaining steam from the 1.1% rise tallied in the first quarter of the year.

Household spending increased 3.5% in the second quarter (Q1: +1.1% s.a. qoq), while government spending growth picked up to 3.5% in Q2 (Q1: +0.7% s.a. qoq). That said, fixed investment grew 1.6% in Q2, slowing from the previous quarter’s 2.7% rise and marking the lowest reading since Q2 2020’s pandemic-induced contraction.

Meanwhile, both exports (Q2: +2.7% s.a. qoq; Q1: -0.2% s.a. qoq), and imports of goods and services (Q2: +3.1% s.a. qoq; Q1: -1.1% s.a. qoq) rebounded solidly, likely as a result of a lower number of Covid-19 infections and loosening of associated restrictions at home and among key European trading partners.

On an annual basis, GDP rose 14.9% in Q2 (previously reported: +14.5% year-on-year) sharply contrasting the previous quarter's 0.5% contraction. The result marked the fastest expansion since records began, but was largely bolstered by a low base effect, as Q2 2020 contrastingly logged the steepest contraction on record.

Looking ahead, high-frequency indicators paint a positive picture for the Belgian economy: Both consumer and business confidence remained upbeat through July and August amid gradually easing pandemic-related restrictions and a swift vaccination campaign. Nevertheless, the recent rise in new Covid-19 cases due to the Delta variant poses a downside risk.

FocusEconomics Consensus Forecast panelists forecast GDP to increase 4.8% in 2021, which is up 0.1 percentage points from last month’s projection. For 2022, the panel sees economic growth of 3.3%.