Country Economic Forecasts > Belgium

The terrorist events in Brussels in March weighed on activity at the start of the year, with the first GDP estimate for Q1 revealing that output rose by just 0.2% q/q from Q4 2015. The recent weakness in consumer confidence as expected suggests that the attacks may indeed have depressed household spending, though stronger business confidence points to a rise in investment. While some rebound in activity is expected from Q2, growth is forecast to remain modest at 1.3% this year versus 1.4% in 2015, particularly with consumption constrained by the government-mandated salary freeze until 2017. But businesses will benefit from loose ECB policy, the continued fall in the euro and the tax shift reform which will reduce labour costs and improve competitiveness, while net trade should also improve. Key downside risks to the forecast include high public debt levels, a further bout of financial market turmoil and slower global economic growth, perhaps originating from China.