The Institute of Economic and Social Research (IRES) of UCLouvain reported that Belgian economy growth will rise by 1.1% in 2020, which is at 1.2% this year. Regardless of the strong creation of jobs and a weakening of inflation, the Belgian economy is still growing slowly.
As slothful growth across the Eurozone and prolonged Brexit uncertainties weigh on exports, the highly open economy of Belgium is projected to active this year. According to the institute report, the growth of the global economy is declining, and the eurozone is also not doing well, due to the Brexit and the trade dispute between China and the United States.
Besides this, Belgian companies’ consumer confidence has also depreciated sharply since the beginning of the year. It is also expected the growth in employment of 60,700 units in 2019 and 37,300 units in 2020, while the number of job seekers would reduce by 23,400 units this year and 14,000 units in 2020.
Purchasing Power Grows Up
The growth rate of business investment in Belgium is projected to steadily normalise, while household consumption will rise more strongly than in the past few years. This is majorly growing because of the favorable development in purchasing power, which is set to be 3.5% higher per capita by 2021, due to a surge in wage growth.
Rising with almost constant growth over the projected timeframe, certain demand components are evolving in opposite directions. Private consumption should gain strength, as a result of the rise in purchasing power. Conversely, economic growth will be gradually less supported by business investments, which should moderate further according to their usual cycle. Moreover, the contribution to growth from net exports is predicted to gradually become more negative, as the increase in imports gains momentum, driven by the expansion of domestic demand, while export growth is expected to stagnate.
Slow Growth in the Global Economy
Due to intensified US-China trade war along with protracted uncertainty over Brexit, the momentum of global economic growth almost subdued in the first half of 2019. In the first quarter of this year, China was stronger than forecast, among emerging markets and developing economies, but for the second quarter, economists suggest a weakening of activity. Even, in other emerging Asia nations, as well as in Latin America, activity has distraught.
From a sectoral perspective, reports noted, service sector activity has held up, but the slowdown in global manufacturing activity that began in early 2018 has still constant, indicating weak business spending on machinery and equipment and consumer purchases of durable goods, such as cars. Meanwhile, these developments indicate that firms and households continue to hold back on long-range spending amid elevated policy uncertainty.
