BRUSSELS, 20th May, 2025 (WAM) -- Economic activity in Belgium is expected to slow down to 0.8% in 2025, mainly due to high global uncertainty and decreased exports, the European Commission said in its latest macroeconomic forecast for the western European country.

It is projected to increase slightly to 0.9% in 2026, supported by improving external demand. Inflation is forecast to decrease to 2.8% in 2025 and 1.8% in 2026, driven by lower price pressures for industrial goods and energy. The government deficit is projected to increase over the forecast horizon due to rising expenditure, mainly on ageing related costs, defence and interest payments. Therefore, the government debt is also expected to continue its increasing path.

The Belgian economy grew by 1% in 2024, mainly supported by strong private consumption despite weakened purchasing power. Investment increased only moderately, and while both exports and imports declined, net export had a slightly positive contribution to growth. GDP growth remained robust at 0.4% q-o-q in the first quarter of 2025.

Domestic demand is expected to slow down in 2025, with a further moderation anticipated in 2026. Decelerating employment growth and declining consumer sentiment are projected to weigh on private consumption. Consequently, the saving rate is forecast to decrease only moderately to around 12.6% of disposable income in 2026. Investment is set to increase by 0.5% in 2025 and 1.2% 2026, respectively. While construction is set to expand, uncertainties in the external environment are expected to hold equipment investment back. The introduction of US tariffs is projected to adversely affect Belgian exports, the US being Belgium's fourth largest export market, especially in the pharmaceuticals sector (exempted from tariffs so far), machinery and equipment, and transport-related sectors. Imports are set to decrease less than exports, resulting in a negative contribution of exports to growth in 2025. Following a contraction in 2025 exports and imports are expected to rebound in 2026, driven by the expected mild improvement of the external environment.

Overall, the economic activity is forecast to grow by 0.8% in 2025, followed by a mild recovery of 0.9% in 2026.