Belgium: GDP growth records slowest increase in two years in Q4
GDP growth edged down to 0.1% on a seasonally adjusted quarter-on-quarter basis in the fourth quarter from 0.2% in the third quarter. Q4’s reading marked the worst result since Q4 2020.
On the domestic front, the moderation was driven by a steeper fall in fixed investment of 0.8% in Q4, from the 0.5% decrease in the previous quarter, driven by contracting housing investment amid higher interest rates. In contrast, household spending increased 1.1% in the fourth quarter, which was above the third quarter’s 0.8% expansion, due to higher spending on non-durable goods. Public spending, moreover, accelerated to a 0.9% increase in Q4 (Q3: +0.2% s.a. qoq).
On the external front, exports of goods and services worsened, contracting 0.7% in Q4 (Q3: +1.4% s.a. qoq). Imports of goods and services also deteriorated, contracting 0.7% in Q4 (Q3: +1.6% s.a. qoq), marking the worst reading since Q2 2020.
On an annual basis, economic growth cooled to 1.4% in Q4, following the previous quarter’s 1.9% figure. Q4’s reading marked the softest expansion since Q1 2021.
Looking ahead, quarter-on-quarter economic growth is expected to remain subdued in H1 2023 but avoid a contraction. Still-above-target inflation and an ailing industrial sector should drag on growth. Nevertheless, from H2 onwards, lower price pressures—notably in the gas-dependent industrial sector—and stronger expected global demand should spur both private consumption and export growth.
Economists at the EIU commented:
“The outlook is now more positive than six months ago, with the economy having avoided a recession over the 2022/23 winter. However, we still expect a sharp slowdown in full-year 2023. […] Still-high inflation will weigh on consumer confidence and erode purchasing power, although automatic wage indexation will partly mitigate the loss of spending.”
FocusEconomics analysts see the economy expanding 0.1% in 2023, which is down 0.4 percentage points from last month’s forecast, and 1.8% in 2024.