Economic projections for Belgium – Spring 2015

The article presents the new macroeconomic projections for Belgium for the 2015-2017 period, drawn up by the Bank as part of the Eurosystem forecasting exercises. In the euro area, the recovery underway is currently enjoying strong tailwinds : the sharp drop in oil prices, the depreciation of the euro and the low level of interest rates are all strong drivers of demand, in a context of less restrictive fiscal policies. According to the Eurosystem projections, real GDP in the euro area should rise by 1.5 % in 2015, before climbing to approximately 2 % in 2016-2017. As for Belgium, the economic recovery should continue at a relatively moderate pace, with GDP growing by 1.2 % in 2015, before strengthening to 1.5 % in 2016 and 1.7 % in 2017. The pick-up in growth can be mainly traced back to rising net exports that are in turn partly due to the improvement in cost competitiveness of Belgian firms. The economic upturn and the moderate rise in wage costs will help support net job creations which are expected to reach a cumulative figure of 94 000 units over the period from 2015 to 2017, with the unemployment rate dropping below the 8 % mark in 2017. Inflation, which has been heavily influenced by the fall in energy prices, should remain very low in 2015, at 0.6 %, before rising to 1.5 % in 2016 and 2017. Under the impact of competitivenessboosting measures and rising productivity, unit labour costs in the private sector should remain very weak, which would in turn put some brake on underlying inflation developments at least until 2016. Taking account of only those fiscal measures announced by the federal government and the federated entities, subject to the guidelines for the Eurosystem projection exercises, the budget deficit should come down over the forecasting horizon, falling back to 2.0 % in 2017. The public debt is forecast to remain around 107 % of GDP throughout the projection period.