Belgium: Economic growth falls to softest pace since Q1 2022 in Q2
According to a flash release, activity growth softened somewhat in the second quarter, with GDP expanding 0.2% on a seasonally adjusted quarter-on-quarter basis (Q1: +0.3 s.a. qoq) and marking the slowest expansion since Q1 2022. Q2’s reading also fell short of the Euro area average of 0.3%. On an annual basis, economic growth in Belgium eased to 1.1% in Q2, from the previous period’s 1.3% expansion and marking the lowest reading since Q1 2021.
Preliminary data showed that activity in the industrial sector declined by 0.3% in seasonally adjusted qoq terms in Q2, deteriorating from Q1’s 0.1% rise, making it the main driver of overall growth moderation. In addition, services sector growth slowed to 0.2% in Q2 from Q1’s 0.4% expansion. More positively, construction activity rebounded strongly from Q1’s 0.2% decline, growing 1.1% in Q2.
During the remainder of the year, GDP growth will remain near Q2’s level, subdued by still-elevated inflation and interest rates, coupled with muted activity in the Euro area. Over 2024 as a whole, the economy will expand at a softer pace than last year, chiefly due to a contraction in fixed investment and slowing public spending. However, robust private consumption and a softer decline in exports should provide tailwinds. A quicker-than-expected recovery in the EU is an upside risk.