Economic Outline

Economic Indicators

Situated between the UK, Germany and France, Europe’s three main economies, Belgium benefits from a strategic geographical position. Despite facing global economic challenges, Belgium's economy displayed remarkable resilience in 2023, with GDP growing 1.4%. However, growth in the first half of 2024 was subdued, mainly due to weak domestic demand. Private consumption rose only moderately, hindered by declining purchasing power and slow employment growth. While business investment grew significantly, driven by exceptional transactions, household investment remained constrained. For the year as a whole, the IMF estimated a 1.1% rise in economic activity. Private consumption is expected to rise moderately over the forecast horizon, reflecting modest disposable income growth. Despite declining, the saving rate should remain high in 2025-26 due to weak consumer confidence. Business investment will continue to grow at a slower pace, supported by lower financing costs and improved external demand. Overall, investment is projected to increase by 1.8% in 2025 and 1.9% in 2026, bolstered by the RRP (EU Commission). GDP growth is forecast at 1.2% this year, and 1.3% in 2026 (IMF).

In 2024, the government budget deficit increased to 4.6% of GDP. Savings from phasing out energy price mitigation measures and competitiveness support (0.4% of GDP) were offset by a rise in structural spending and slower revenue growth from indirect taxes. The increase in expenditure was driven by ageing-related costs, public debt interest, and higher government investment. In 2025, the deficit is expected to rise further to 45.2% of GDP, as no major new measures are planned (IMF). Expenditure on social benefits will continue to grow, and interest costs will increase due to higher debt levels and refinancing rates, despite falling interest rates. These increases will be partly offset by a moderation in government investment after the election year. In 2024, general government debt increased moderately to around 103.4% of GDP, mainly due to a debt-reducing stock flow adjustment from the lower balance of short-term state notes. In 2025 and 2026, debt is projected to rise more rapidly to 107.2% of GDP (EU Commission forecast), driven by the government deficit, despite the fact that federal and regional governments have recently taken steps toward consolidation and sovereign bond spreads have remained stable. Meanwhile, the withdrawal of energy support measures drove inflation up to 4.3% in 2024 (from 2.3% one year earlier) but easing inflationary pressures over the forecast horizon are set to bring inflation down to 2.1% in 2025 and 2% in 2026 (IMF).

Employment growth slowed in the first half of 2024, mainly due to declines in the industrial and retail sectors. It remained sluggish in the second half, reaching just 0.3% for the year. Employment is expected to increase steadily in the coming years, with the rise in the retirement age likely to boost labour market participation, while the unemployment rate is projected to remain stable at around 5.7%. Wage growth, driven by automatic wage indexation, is expected to slow due to the anticipated deceleration of inflation. 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. Overall, Belgian citizens enjoy a high GDP per capita, estimated on average at USD 58,256 by the IMF for 2025.

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