Nowcast Q3: 0.2% growth
In our latest nowcast, developed in partnership with Ghent University, we observe a recovery in economic growth during the quarter that has just ended. Despite a challenging international environment and a difficult budgetary situation, the Belgian economy is displaying a degree of resilience.
A return to growth after a period of stagnation
Following a second quarter marked by zero growth, the National Bank of Belgium’s (NBB) Business Cycle Monitor (BCM) struck a cautiously optimistic tone last month, forecasting 0.3% growth.
At the time, the NBB anticipated continued growth in private consumption and a rebound in investment. However, investment had faced pressure in Q2: business investment fell by 0.7%, while public sector investment plummeted by 8%.
Households
CThe picture for households remains mixed. Their expectations regarding the labour market have deteriorated, though they stay above the historical average. Their perception of the overall economic situation remains gloomy, even as confidence has largely recovered from the sharp decline following the outbreak of war in Iran in March.
After a dip in the second quarter, their willingness to make major purchases has rebounded, reaching a level slightly below the long-term average. Retailers confirm this trend: their assessment of recent sales improved in the third quarter, returning to levels last seen in 2023.
Businesses
For businesses, tentative signs of improvement are emerging. Most firms continue to invest, though they favour cost savings over capacity expansion. The emphasis remains on sustainability and efficiency, with investments targeting automation, digitalisation, AI, and maintenance, according to the NBB.
Notably, international trade has made a positive contribution to growth. In the first half of the year, net exports significantly supported the Belgian economy. While this momentum is expected to moderate in the coming months, an upside surprise cannot be ruled out.
Nowcast: 0,2%
Based on the latest data, we have revised our nowcast for the quarter that has just ended, increasing it from 0.1% to 0.2%.
Business sentiment has improved in the manufacturing sector. This is a key driver of investment but it has declined in other industries. Household confidence has also weakened slightly. Meanwhile, our corporate clients report higher activity levels than in the previous quarter. Overall, we expect Belgian economic growth of 0.6% this year and 1.1% next year.
