Belgium: Economic outline
For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.
Belgium benefits from a strategic geographical position: situated between the UK, Germany and France, Europe’s three main economies. Despite experiencing a historic recession due to the COVID-19 pandemic, the Belgian economy has recovered much faster than expected and has already reached its pre-pandemic level: according to the latest estimates by the IMF, GDP grew 5.6% in 2021 thanks to an uptick in private consumption and in investments. The IMF expects real GDP to grow by 3.1% and 1.8% in 2022 and 2023, respectively, also due to a negative contribution of net exports.
The measure taken to mitigate the impact of the COVID-19 crisis (including health measures, various regional schemes to compensate businesses for reduced turnover, and temporary unemployment schemes) led to a budget deficit of around 6.3% in 2021. Despite the expected phasing-out of most pandemic-related measures, public expenditure is projected to decrease only slightly in nominal terms this year and to increase again in 2023. Accordingly, the budget deficit should decrease to 4.4% in 2022, before picking up to 4.6% the following year (IMF). The debt-to-GDP ratio stood at around 113.4% in 2021, and it is expected to decline to 112.9% this year before it increases again to 114% in 2023 due to a persistent government deficit. Higher energy prices and an unprecedented labour cost growth (due to the indexation of wages) led to a headline inflation of 2.4% in 2021. According to the National Bank of Belgium, headline inflation should peak in the first months of 2022 (at close to 8%) and core inflation should peak by mid-2022; but both indexes should fall back to levels that are clearly below 2% by the end of the projection period.
Unemployment increased only slightly in 2021 thanks to the policy measures taken to shelter jobs, as it stood at 6.3% (IMF). The rate is expected to decrease gradually to 6.1% and 5.9% this year and the next, in line with economic growth. The low labour market participation rate remains a major challenge for Belgium in the coming years, with unemployment disproportionately affecting young people, non-European immigrants and the region of Wallonia as a whole.
Main Indicators | 2019 | 2020 | 2021 (e) | 2022 (e) | 2023 (e) |
GDP (billions USD) | 533.31 | 514.92e | 581.85 | 619.16 | 650.84 |
GDP (Constant Prices, Annual % Change) | 1.8 | -6.3e | 5.6 | 3.1 | 1.8 |
GDP per Capita (USD) | 46,555 | 44,688e | 50,413 | 53,452 | 55,939 |
General Government Balance (in % of GDP) | -2.2 | -7.4e | -6.3 | -4.4 | -4.6 |
General Government Gross Debt (in % of GDP) | 98.1 | 114.1e | 113.4 | 112.9 | 114.0 |
Inflation Rate (%) | 1.2 | 0.4e | 3.2 | 8.0 | 1.3 |
Unemployment Rate (% of the Labour Force) | 5.4 | 5.6e | 6.3 | 6.1 | 5.9 |
Current Account (billions USD) | 1.86 | -0.78e | -0.08 | -3.82 | -4.12 |
Current Account (in % of GDP) | 0.3 | -0.2e | -0.0 | -0.6 | -0.6 |
Source: IMF – World Economic Outlook Database, 2016
Note: (e) Estimated Data
Monetary Indicators | 2016 | 2017 | 2018 | 2019 | 2020 |
Euro (EUR) - Average Annual Exchange Rate For 1 ZAR | 0.06 | 0.07 | 0.06 | 0.06 | 0.05 |
Source: World Bank, 2015
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Latest Update: June 2022