Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Belgium benefits from a strategic geographical position: situated between the UK, Germany and France, Europe’s three main economies. Despite experiencing a historic recession due to the COVID-19 pandemic, the Belgian economy has recovered much faster than expected and has already reached its pre-pandemic level: according to the latest estimates by the IMF, GDP grew 5.6% in 2021 thanks to an uptick in private consumption and in investments. The IMF expects real GDP to grow by 3.1% and 1.8% in 2022 and 2023, respectively, also due to a negative contribution of net exports.

The measure taken to mitigate the impact of the COVID-19 crisis (including health measures, various regional schemes to compensate businesses for reduced turnover, and temporary unemployment schemes) led to a budget deficit of around 6.3% in 2021. Despite the expected phasing-out of most pandemic-related measures, public expenditure is projected to decrease only slightly in nominal terms this year and to increase again in 2023. Accordingly, the budget deficit should decrease to 4.4% in 2022, before picking up to 4.6% the following year (IMF). The debt-to-GDP ratio stood at around 113.4% in 2021, and it is expected to decline to 112.9% this year before it increases again to 114% in 2023 due to a persistent government deficit. Higher energy prices and an unprecedented labour cost growth (due to the indexation of wages) led to a headline inflation of 2.4% in 2021. According to the National Bank of Belgium, headline inflation should peak in the first months of 2022 (at close to 8%) and core inflation should peak by mid-2022; but both indexes should fall back to levels that are clearly below 2% by the end of the projection period.

Unemployment increased only slightly in 2021 thanks to the policy measures taken to shelter jobs, as it stood at 6.3% (IMF). The rate is expected to decrease gradually to 6.1% and 5.9% this year and the next, in line with economic growth. The low labour market participation rate remains a major challenge for Belgium in the coming years, with unemployment disproportionately affecting young people, non-European immigrants and the region of Wallonia as a whole.

Any Comment About This Content? Report It to Us.