Belgium: Economy records sharpest contraction since Q4 2020 in the third quarter
According to a preliminary estimate, GDP contracted 0.1% on a seasonally adjusted quarter-on-quarter basis in the third quarter, contrasting the 0.5% expansion seen in the second quarter. Q3’s reading marked the worst result since Q4 2020. On an annual basis, economic growth moderated to 1.6% in Q3, following the previous period’s 4.1% increase. Q3’s reading marked the worst reading since Q1 2021.
The quarterly slowdown was driven by a decline in the growth of the industry and services sectors. Output in the industrial sector contracted 0.7%, while the services sector eked out growth of just 0.1%. More positively, the construction sector expanded 0.3%.
Looking ahead, the economy is expected to continue contracting quarter on quarter until Q2 2023. Ongoing elevated inflation and a faltering industrial sector should drag on growth. High gas prices are likely to reduce the profit margins of the highly gas-dependent industrial sector, while the pharmaceutical sector should be affected by lower demand for vaccines. Moreover, high price pressures and rising interest rates also bode poorly for both household consumption and investment, respectively.
FocusEconomics analysts see the economy expanding 0.1% in 2023, which is down 0.4 percentage points from last months forecast, and 1.8% in 2024.