2024-09-11 13:16:12
September 11, 2024
11:33
Update
September 11, 2024
15:16
The Planning Bureau sees growth of 1.1% this year before a modest recovery to 1.3% next year. Job creation, on the other hand, is marking time while the deficit is expected to widen to reach 30.7 billion euros in 2025.
The Belgian economy is expected to grow by 1.1% this year before increasing slightly to 1.3% next year. This is what the Planning Bureau announced in its “Economic Budget 2024-2025”, an exercise that sets the framework for the preparation of the next budget by the federal government. This exercise should in principle be completed by October 15, the deadline set by the European authorities. Except that in the case at hand, a government will probably not see the light of day before the local elections on October 13.
The Belgian economy grew by 0.3% in the first quarter of 2024 (as in the previous three quarters). It then slowed down somewhat to 0.2% in the second quarter. In parallel with the improvement in the international economic situation, Belgian economic growth is expected to accelerate again to reach 0.3% from the third quarter of 2024.
On Monday, the National Bank had announced slightly lower growth, at 0.2%, for the third quarter of this year. It is only from the second quarter of 2025 that quarterly growth would return to 0.4%. On an annual basis, GDP growth will slow from 1.4% in 2023 to 1.1% in 2024, before rising to 1.3% in 2025. These are of course forecasts based on unchanged policy.
Compared to the Eurozone, Belgium did much better last year (1.4% against 0.4%), a little better this year (1.1% against 0.8%) and will align itself with the Eurozone next year (1.3%).
Although modest, The rebound in Belgian growth which began in the second half of this year is driven by all components of demandExports will decrease by 1.9% again this year, but will increase by 1.9% in 2025. Growth in household consumption will rise to 1.6% in 2025 (after 1.1% in 2024), while total investment by households, businesses and the state will increase by 2.5% (after 1.6% in 2024).
The increase in total domestic employment would not exceed 16,000 people in 2024 and 25,000 people in 2025.
Employment is stagnating
The news is less good on the employment front. The Planning Bureau notes that Private sector employment growth has consistently declined throughout 2023 and the first half of 2024It would even be at a standstill in the second half of this year.
This weakening was initially manifested by a sharp drop in temporary employment. Subsequently, the number of salaried jobs in manufacturing, construction and retail trade also declined. The problems encountered by Van Hool and Audi Brussels illustrate the bad times our industry is going through at the moment.
While job creation is expected to gradually resume during the course of 2025, the increase in total domestic employment would not exceed 16,000 people in 2024 and 25,000 people in 2025. Unsurprisingly, the employment rate (20-64 years) barely increases, going from 72.1% in 2023 and 2024 to 72.2% in 2025.
Deficit of more than 30 billion euros
The near-stagnation of employment, combined with modest growth, will inevitably weigh on public finances. The Monitoring Committee estimated the deficit for next year at 29.4 billion euros at the beginning of July.
According to our calculations and taking into account the new data from the Planning Bureau, The deficit is expected to widen further next year, reaching 30.7 billion euros.. Still with unchanged policy of course.
Inflation is slowly falling
According to the Planning Bureau, Belgian inflation is not expected to fall below 2% until 2025With the downward impact on gas and electricity prices having disappeared, inflation is currently higher than at the end of 2023.
Thanks to the slowdown in core inflation (which does not take into account certain volatile components such as energy and fresh food) and the recent drop in oil prices, Inflation is however expected to continue to decrease on an annual basis, from 3.2% in 2024 to 1.9% in 2025.
The summary
- The Planning Bureau is counting on Belgian GDP growth of 1.1% in 2024 and 1.3% in 2025.
- The timid recovery that is expected in 2025 will be carried both through household consumption and through exports and investment.
- On the other hand, theEmployment is marking timeparticularly in the manufacturing sector.
- Inflation should not not fall below 2% before 2025.
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Belgium GDP growth 2024
Belgium’s Economy: Modest Growth Expected in 2024 and 2025
As of September 11, 2024, the Planning Bureau has announced its economic forecasts for 2024 and 2025. According to the Bureau, the Belgian economy is expected to grow by 1.1% in 2024, followed by a slight recovery to 1.3% in 2025. This news comes as the country prepares for local elections on October 13, which may impact the formation of a new government.
The Planning Bureau’s forecasts are based on unchanged policy and suggest that the economy will slow down from the 1.4% growth rate seen in 2023. However, this is still a positive trend, driven by all components of demand, including exports, household consumption, and investment. Exports are expected to decrease by 1.9% in 2024 but will increase by 1.9% in 2025. Household consumption will rise to 1.6% in 2025, while total investment will increase by 2.5%.
In comparison to the Eurozone, Belgium performed better in 2023 with a growth rate of 1.4% compared to the Eurozone’s 0.4%. This year, Belgium’s growth rate is expected to be 1.1%, slightly higher than the Eurozone’s 0.8%. In 2025, Belgium’s growth rate is forecasted to align with the Eurozone’s 1.3%.
The National Bank has also announced its own forecasts, with slightly lower growth rates. According to the Bank, quarterly growth will slow down to 0.2% in the third quarter of 2024, before returning to 0.4% in the second quarter of 2025.
Economic Indicators: Belgium’s Performance
According to the Heritage Foundation, Belgium’s population stands at 11.6 million, with a GDP (PPP) of $735.0 billion [1[1[1[1]. The country has seen a 3.2% growth in 2022, with a 5-year average growth rate of 1.6%. The GDP per capita is $63,268.
The OECD Economic Survey provides a concise summary of Belgium’s economic trends and prospects, highlighting areas for improvement and opportunities for growth [2[2[2[2].
Challenges Ahead
Despite the forecasted growth, challenges remain. Job creation is marking time, and the deficit is expected to widen to reach 30.7 billion euros in 2025. The National Bank’s forecasted growth rates are slightly lower than the Planning Bureau’s, indicating a potential slowdown in the economy.
Belgium’s economy is expected to experience modest growth in 2024 and 2025, driven by all components of demand. While challenges persist, the country’s economic indicators suggest a strong foundation for growth and development.
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