The Belgian economy is projected to slow significantly in 2025, with growth expected to decline to 0.8%, according to the latest macroeconomic forecast released by the European Commission. This deceleration is attributed primarily to heightened global uncertainty and weakening export performance, which have dampened external demand and investment activity. The report forecasts a modest recovery in 2026, with gross domestic product (GDP) growth anticipated to edge up slightly to 0.9%.
This expected uptick is supported by a gradual improvement in external economic conditions, although domestic challenges are likely to persist. Inflation is set to decline from its current levels, reaching 2.8% in 2025 and falling further to 1.8% in 2026. This downward trend is linked to easing pressures on industrial goods and energy prices. Despite the easing inflationary environment, the report warns of continued fiscal strain. The government deficit is projected to increase due to higher public spending, particularly in sectors related to ageing populations, defence commitments, and rising interest obligations.
Public debt is expected to continue its upward trajectory in parallel with these fiscal pressures. Economic growth in 2024 stood at 1%, largely sustained by resilient private consumption. Although purchasing power weakened, households maintained spending levels. Investment growth remained moderate, and both exports and imports recorded declines. However, net exports contributed slightly to overall growth. In the first quarter of 2025, GDP rose by 0.4% quarter-on-quarter, indicating a degree of stability before the projected slowdown.
Domestic demand is expected to lose momentum throughout 2025, with further weakening forecast for 2026. Slower employment growth and reduced consumer confidence are anticipated to curb private consumption. As a result, the household saving rate is projected to decline only slightly, settling at approximately 12.6% of disposable income by 2026. Investment is expected to grow modestly, with a 0.5% increase in 2025 and a further 1.2% in 2026. While construction activity is predicted to expand, broader investment in equipment is likely to remain subdued amid persistent external uncertainties.
One key factor weighing on exports is the implementation of new US tariffs, particularly affecting machinery, transport equipment, and the pharmaceuticals sector, despite the latter having previously been exempt. With exports projected to contract more sharply than imports in 2025, net exports are expected to make a negative contribution to overall growth. However, both exports and imports are forecast to rebound in 2026, driven by a mild improvement in global economic conditions. – By MENA Newswire News Desk.