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Belgium
Private consumption and business investment are set to continue driving a robust economic rebound. GDP
growth is projected to reach 3.2% in 2022 before reverting towards potential at 1.4% in 2023. The labour
market has recovered, with the unemployment rate expected to peak at 6.6% in 2022 and then decline.
Labour and skill shortages in key sectors could weigh on growth. Inflation is edging up and rapidly rising
energy prices could fuel wage inflation through indexation.
Fiscal policy is expected to tighten in 2022. Enhanced lifelong learning and active labour market policies are
needed to reallocate workers and reach the government’s ambitious employment targets, especially among
vulnerable groups. Swift execution of planned product market reforms is key for reviving productivity growth.
Given the high ratio of public debt to GDP, rebuilding fiscal buffers will be necessary to be able to cope with
future shocks and further increase green and digital investment.

A buoyant recovery is occurring following the lifting of restrictions

Growth is surpassing expectations, driven by resilient business investment and a surge in private
consumption enabled by the effective vaccine rollout (74% of the population had been fully vaccinated by
mid-November). Both business and consumer confidence have peaked over the summer, but remain
above historical trends. Google retail and recreation indicators are showing a normalisation of consumer
mobility since June. Reinforced containment measures were taken in November in response to the recent
surge in COVID-19 cases, including mandatory teleworking, stricter rules on large private events and
limited opening hours in restaurants and bars. The labour market is tightening, with relatively large and
increasing vacancy rates. Temporary unemployment has fallen while employment has been expanding,
exceeding pre-pandemic levels since the spring. Inflation is rising due to supply constraints, service
businesses looking to restore profit margins and rapidly rising natural gas, domestic heating oil and
electricity prices. Core inflation has edged up and energy products contributed 3.8 percentage points to
the 5.4% annual headline inflation rate in October.
Belgium
Investment and consumption are driving growth The labour market has recovered
Index 2019Q4 = 100, s.a. % of corresponding workers
120 Real GDP
60
Real private consumption 2019 Temporary unemployment (% of employees)¹

Real business investment 50

110 Temporary unemployment (% of employees)
Replacement income (% of self-employed)²
40

100
30

90 20

10
80
0 0
May 20

May 21
Aug 20
Sep 20

Nov 20
Dec 20

Aug 21
Sep 21
Mar 20

Feb 21
Mar 21
Jun 20

Jan 21

Jun 21
Apr 20

Oct 20

Apr 21
Jul 20

Jul 21

70 0
2020 2021 2022 2023

1. Calculated as the monthly average over 2019.

2. Social security benefit granted in case of cessation of business (droit passerelle/overbruggingsrecht).
Source: OECD Economic Outlook 110 database; National Bank of Belgium; National Employment Office; and National Institute of Social Security
for the Self-Employed.

StatLink 2 https://stat.link/nop982

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80 

Belgium: Demand, output and prices

2018 2019 2020 2021 2022 2023

Current prices Percentage changes, volume

EUR billion (2015 prices)
Belgium

GDP at market prices 460.0 2.1 -5.7 6.1 3.2 1.4

Private consumption 238.2 1.8 -8.2 5.7 6.6 2.2
Government consumption 106.2 1.7 0.2 2.0 -0.5 -0.3
Gross fixed capital formation 108.5 4.5 -6.2 10.8 3.4 2.9
Final domestic demand 453.0 2.4 -5.8 6.0 4.1 1.8
Stockbuilding¹ 8.2 -0.5 -0.3 -0.3 0.0 0.0
Total domestic demand 461.1 1.9 -6.1 5.6 4.0 1.8
Exports of goods and services 382.0 2.0 -5.5 10.5 5.1 3.2
Imports of goods and services 383.1 1.6 -5.9 10.0 6.0 3.5
Net exports¹ - 1.1 0.3 0.4 0.5 -0.7 -0.4
Memorandum items
GDP deflator _ 1.8 1.3 3.3 2.3 1.8
Harmonised index of consumer prices _ 1.2 0.4 2.9 3.3 2.1
Harmonised index of core inflation² _ 1.5 1.4 1.1 1.8 2.1
Unemployment rate (% of labour force) _ 5.4 5.6 6.3 6.6 6.4
Household saving ratio, net (% of disposable income) _ 6.1 15.5 11.2 5.6 4.3
General government financial balance (% of GDP) _ -1.9 -9.1 -8.1 -4.8 -5.0
General government gross debt (% of GDP) _ 120.4 141.5 140.5 140.0 141.9
General government debt, Maastricht definition³ (% of GDP) _ 97.7 112.8 111.7 111.3 113.1
Current account balance (% of GDP) _ 0.2 0.8 0.4 -0.6 0.1
1. Contributions to changes in real GDP, actual amount in the first column.
2. Harmonised index of consumer prices excluding food, energy, alcohol and tobacco.
3. The Maastricht definition of general government debt includes only loans, debt securities, and currency and deposits, with debt at
face value rather than market value.
Source: OECD Economic Outlook 110 database.

StatLink 2 https://stat.link/cvdl7p

Support measures are unwinding

The extension of temporary unemployment for employees and replacement income for the self-employed
is set to expire at the end of 2021. Moratoria on both loans and government claims (social security
contributions and value added tax) ended in June, while the suspension of bankruptcy proceedings was
lifted in January. Large pandemic-related spending has increased Maastricht public debt from 97.7% of
GDP in 2019 to 112.8% of GDP in 2020, with around EUR 14 billion of support measures in 2021 (2.8%
of GDP) and EUR 2 billion budgeted for 2022, down from around EUR 21 billion in 2020. Subordinated
debt and guarantees amount to around 2.5% of GDP in 2021. The national recovery and resilience plan
includes EUR 5.9 billion (1.2% of GDP) of Next Generation EU grants, overwhelmingly earmarked for
green (building renovation and transport infrastructure) and digital investment, with two thirds of the total
planned to be absorbed over the period 2021-23. The supplementary investment allowance is also planned
to be restricted to green and digital assets beyond 2022.

Domestic demand is set to drive growth

GDP surpassed its pre-pandemic level in the third quarter of 2021 and is projected to expand by 3.2% in
2022 before growth stabilises at 1.4% in 2023. Private consumption is expected to drive growth in 2022,
with the household saving ratio normalising and the economy fully open, but will moderate in 2023.
Business investment is also projected to grow robustly given high demand prospects, rising capacity

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utilisation and low interest rates. While public consumption is expected to recede due to lower COVID-
related spending on support measures and healthcare, public investment is set to increase as the national
recovery plan is rolled out. Net exports are projected to damp GDP growth. Unemployment is expected to
peak at 6.6% in 2022 as hours worked rise and job retention measures are unwound, before falling in
2023. The high inflation rate in late 2021 is projected to carry over through 2022 before receding in 2023,
as the contributions of supply chain bottlenecks and energy prices subside. An export boost from higher-
than-expected growth in Belgium’s main trading partners is an upside risk, but risks are generally on the
downside. A worsening of the sanitary situation would necessitate partial restrictions on non-essential
economic activities. Limited cross-border migration, and increasing labour demand related to recovery
plans and the reconstruction of flood-affected areas, could worsen labour and skill shortages in key sectors
such as construction and IT services. Energy price pressures are building up and are expected to trigger
a further 2% automatic wage indexation in early 2022, adding to the 2% automatic indexation in the last
quarter of 2021 and creating the risk of labour cost inflation over the projection period.

Facilitating reallocation will be key

More effective lifelong learning, such as the planned personalisation of training allowances, is necessary
to support workers as job retention policies are unwound. While planned reforms to boost labour market
transitions and facilitate activation across regional borders are welcome, further action and enhanced
active labour market policies targeted on vulnerable groups are needed to reach the authorities’ ambitious
employment targets by 2030. The execution of reforms to streamline regulations and support digitalisation
as outlined in the national recovery plan will be key to increase productivity and potential growth.
Expenditure-led adjustments, outlined in a medium-term fiscal adjustment strategy at each level of
government, will be required once the recovery is firmly based in order to rebuild fiscal space to address
future shocks and create room for supporting the low-carbon transition. Effective co-ordination of climate-
related efforts across different levels of government and a credible long-term carbon pricing framework will
be needed to achieve net-zero targets.

OECD ECONOMIC OUTLOOK, VOLUME 2021 ISSUE 2: PRELIMINARY VERSION © OECD 2021