Nowcast Q1: slower growth confirmed, inflation picks up
5 min
Is there a chance that traffic through the Strait of Hormuz will increase again soon? The chances of a partial normalisation appear to be rising. At least, that's what Polymarket, a prediction market, suggests. However, this should be treated with caution given the rumours of insider trading. The signal from commodity markets is clearer: oil and gas prices have fallen since the announcements earlier this week. However, they remain very high, and the impact is gradually being felt in the Belgian economy.
Slower growth…
Our nowcast, developed in collaboration with Ghent University, confirms the slowdown in growth that we announced last month. This is not surprising. Consumer confidence has meanwhile fallen sharply. In March, it reached its lowest level since May 2025.
Businesses in certain sectors, particularly construction and services, are also pessimistic. There was a slight recovery in industry, while sentiment in trade improved significantly.
With a considerable degree of caution, due to incomplete underlying data, we are therefore maintaining our estimate of quarterly growth at 0.15%.
For now, this places us exactly between the two scenarios we outlined previously:
- 'Hormuz Constrained': very high prices are paid for fossil fuels for a relatively short period; however, after just over a year, prices return to previously forecast levels.
- 'Power Vacuum': a prolonged situation of persistently higher prices, albeit with lower peaks than in the above scenario.
…and higher inflation
Meanwhile, inflation in Belgium is edging higher. In March, the HICP — the ECB’s preferred measure — stood at 2.0%. The Federal Planning Bureau reported inflation of 3.2% in April.
The outlook has also worsened significantly. This is largely due to the Federal Planning Bureau now taking higher energy prices into account. The table below compares the CPI inflation forecast with our own HICP projections under the two aforementioned scenarios.
If oil and gas prices remain high throughout the year, the price level in our country could rise considerably faster. For now, this is not our base scenario. However, it is noteworthy that an increasing number of businesses are announcing price increases over the next three months. This is the case in construction and services, as well as in industry.
This 'pass-through intention', based on a question in the monthly business survey, proved to be a strong predictor of overall inflation during the previous energy price crisis. It is therefore something to monitor closely.