Nowcast 2 Q2: 0.15% – Uncertainty persists
3 min
Since April last year, the number of benefit recipients has fallen by 83,000, from 287,000 to 204,000. However, there are significant regional variations, with a quarter fewer recipients in Brussels and a similar decline in Wallonia. In Flanders, however, the figure has barely changed.
More unemployed people
The labour market continues to cool. According to the latest figures, the unemployment rate is 6.2%, which is slightly higher than the 6.0% recorded a year ago.
New jobs are still being created. However, over the past 12 months, this has almost entirely been driven by an increase in the number of self-employed workers. The annual growth rate in this category is gradually approaching the historical peak reached during the pandemic. Meanwhile, consumer confidence continues to weaken, although it remains reasonably moderate for now.
Business confidence continues to decline
The situation is different for businesses. Confidence among retailers and service providers in particular continues to deteriorate. In this context, the National Bank of Belgium’s Business Echo offered a slightly more positive outlook, presenting anecdotal evidence of a cautious yet consistent appetite for investment among Belgian companies.
For the time being, these companies are proving resilient in the face of the energy price shock. However, second-round effects are on the way. Excluding the services sector, more than a third of all businesses surveyed expect to increase their prices over the next 3 months. This is also reflected in our inflation outlook.
Outlook
In our baseline scenario, we now anticipate significantly higher oil prices until the end of the year. Price pressures on gas persist for longer under this scenario. This translates into harmonised inflation of 3.4% this year and 2.2% next year.
Our nowcast, developed in collaboration with Ghent University, once again indicates slower growth. Taking all factors into account, we estimate growth of 0.15% for the current quarter. On an annual basis, this equates to growth of 0.7% this year and 0.9% next year.