Belgium: GDP growth stable in Q1
GDP growth was stable at Q4 2023’s 0.3% on a seasonally adjusted quarter-on-quarter basis in Q1 2024. On an annual basis, economic growth was steady at the prior quarter’s 1.3% in Q1.
Private consumption growth fell to 0.2% in Q1, marking the weakest expansion since Q2 2023 (Q4 2023: +0.5% s.a. qoq). Government consumption improved moderately to a 0.7% increase in Q1 (Q4 2023: +0.5% s.a. qoq). Meanwhile, fixed investment bounced back, growing 2.7% in Q1, contrasting the 6.3% contraction in the previous quarter. Meanwhile, net exports made a slight positive contribution. Exports of goods and services worsened, contracting 0.3% in Q1 (Q4 2023: +0.4% s.a. qoq). Conversely, imports of goods and services dropped at a more moderate rate of 0.4% in Q1 (Q4 2023: -0.9% s.a. qoq).
Analysts at the EIU commented on the outlook:
“We expect real GDP to expand by 1.1% in 2024, slowing from 1.4% in 2023. Automatic wage indexation will continue to support consumer spending power. However, higher borrowing costs, in line with the ECB’s higher interest rates in the first half of 2024, will partly constrain the impact on private consumption. The export-oriented economy (goods and services exports accounted for 87% of GDP in 2023) will feel the impact of sluggish external expansion through still-weak export growth and a loss of competitiveness due to wage indexation. Elevated uncertainty and macroeconomic risks stemming from the war in Ukraine will constrain growth in investment activity. Meanwhile, a less supportive construction industry will exert a drag on investment. Nevertheless, a very accommodative fiscal policy and a positive outlook for sectors such as energy infrastructure will all support growth in 2024.”