- 19/6/2025

Scenario-thinking is the new black

3 min

Q2: slow but positive

The NBB recently published its BCM’s nowcast for the current quarter. Interestingly, all three of the NBB’s “forecasting models” - Brel Jr., Bosphorus and C3PO – agreed: 0.2% growth.  Our own efforts, made jointly with the University of Ghent resulted in a similar broad-based below-trend output.

Economic activity expected to grow by 0.2% in the second quarter of 2025 | National Bank of Belgium

With both traditional indicators still stuck in red territory, and our in-house bank index slowing down over the last couple of weeks, all signs point towards a cooler economy. The median forecast across the deployed models came in at 0.2%, without a single model breaking this consensus forecast.

For the remainder of the year we still expect a pickup in fiscal spending (at home and abroad) to gradually offset the negative impact of geopolitical and trade-related uncertainty. Full-year growth should come in at 1.1%.

No single future awaits us

Even though we continue to regularly update our outlook for the Belgian economy, it is clear we are now playing a different game (see this earlier contribution Economic outlooks in uncertain times | BNP Paribas Fortis). This sentiment was recently echoed by the NBB’s quarterly publication of the same name.

The business echo is a commendable effort to interview dozens of Belgian business leaders. Their anecdotal but often insightful takes add colour to the more traditional business surveys. And this quarter that colour is orange, as worries abound. From the report:

Business Echo June 2025 | National Bank of Belgium

Several interviewees indicated that they are struggling with the paradigm shift away from a predictable, rules-based framework towards one that is more transactional, marked by abrupt and often drastic policy changes. This is making long-term planning increasingly difficult, pushing firms to hedge their decisions and to adopt more conservative strategies to maintain flexibility. 

In the current environment, traditional point estimates for growth and inflation come with a great set of disclaimers. Decision-makers are better served by thinking through possible scenarios for medium- to long term. This both helps build muscle (or rather brain-) memory and fleshes out in more detail what lies ahead. This in turn helps orient resources towards the most impactful use, having lived through them.
 
Actually it’s not just private sector organisations that can gain from this approach. In the current dire budget context, with the added load of military spending and revamping of the labour market as AI lurks at its edges, the government could also benefit from additional foresight capabilities.
 
How about appointing a Secretary for Scenario Thinking? It could pay dividends !

* Meanwhile this was confirmed in the actual release for Q1.