Economic Outlook

Belgium's Economy in a Nutshell - Economic Outlook of February 2021

Séverine Waterbley

FPS Economy, SMEs, Middle Classes, and Energy

Publication date

The economic outlook is published quarterly. It consists of different parts:

an executive summary,

  • a chapter presenting Belgium as a whole,
  • a chapter regarding recent economic developments,
  • a chapter related to foreign trade,
  • a chapter comparing Belgium's performance with that of the European Union for several indicators and
  • a chapter on GDP growth forecasts.

The lessons to be drawn from this edition of the economic outlook are as follows:

Recent cyclical developments indicate that Belgium enjoyed a relatively good GDP growth in 2019 (+1.7 % year-on-year, compared to +1.8 % in 2018), thanks to a strong domestic demand (excluding inventory changes). Moreover, GDP growth was more vigorous in Belgium than in the European Union (+1.5 %) and in the euro area (+1.3 %) in 2019. However, in 2020, economic activity dropped as a result of the COVID-19. During the third quarter of 2020, the Belgian GDP dropped by 4.3 % year-on-year, a less marked decline than that recorded in the second quarter of 2020 (-13.9%) resulting from the gradual recovery of certain economic activities and the lifting of several containment measures during the summer. In particular, private consumption, investment expenditures and net exports pulled economic activity down in the third quarter of 2020.

Services have been the main driver of economic growth since 2014.

The production index in the manufacturing industry fell sharply in the first three quarters of 2020 taken as a whole. It is mainly the downturn observed during the second quarter that pulls the results down under the effect, in particular, of the partial or total cessation of activity in certain industries following the containment measures taken by the government to combat the expansion of the COVID-19 pandemic.

Business demographics continued to be strong in 2019, with more business start-ups than terminations and a net balance of 37,546 units, the largest net balance observed over the period 2015-2019. While this entrepreneurial dynamism continued in the first quarter of 2020, things deteriorated somewhat in the second quarter of 2020 before improving thereafter. Thus, in the third quarter of 2020, not only does the net balance of creations and disposals remain positive, but it also improves year-on-year.

Overall, 2019 proved to be a favourable year for the labour market, with employment rates continuing to rise and unemployment rates declining (both total unemployment and unemployment among young people under 25). By contrast, in the third quarter of 2020, all employment indicators deteriorated year-on-year. In fact, the employment rate fell to 65.1 % compared with 65.8 % a year earlier, the youth unemployment rate reached 17.7 % compared with 13.2 % a year earlier and the total unemployment rate reached 6.5 % compared with 5.3 % a year earlier. This is not surprising given the severe economic and health crisis affecting most of the world's economies.

Despite a rise in unprocessed food prices, HICP inflation slowed down in 2020 (0.4 % compared with 1.3 % in 2019), driven by a decline in the prices of the main energy products and, to a lesser extent, a deceleration in industrial goods prices.

As regards the short-term growth prospects for Belgium, the Federal Planning Bureau is forecasting a major economic recession in 2020 as a result of the global coronavirus crisis. According to the economic budget outlook, GDP is expected to decline by 6.2 % in 2020 (which is less than initially forecasted). However, these figures remain surrounded by great uncertainty. Moreover, the recovery is already expected to take place in 2021 with an economic growth of 4.1 %.

Last update
19 March 2021