- Wednesday, October 16, 2024
Belgium's economy experienced a slowdown in the second quarter of 2023, primarily due to contraction in the industrial sector and the impact of rising interest rates on investment and household spending. Preliminary estimates from the National Bank of Belgium reveal that the country's gross domestic product (GDP) grew by 0.2% from April to June, marking a deceleration from the 0.4% expansion seen in the first quarter. However, this growth figure fell short of the expected 0.4%, according to a consensus forecast from FactSet.
Key Factors Affecting the Economy
The services sector played a crucial role in boosting the economy, with a 0.5% expansion compared to the previous quarter. Construction output also saw a slight increase of 0.1%. However, the industrial sector faced significant challenges, contracting by 1.0% during the same period.
Rising European Central Bank Rates and Investment
One of the key factors hindering investment growth is the rise in interest rates implemented by the European Central Bank. In a recent decision, the Frankfurt-based institution raised its key rate by 25 basis points to 3.75%. This move is likely to have had an impact on investment within Belgium.
Resilience and Future Projections
Despite the current slowdown, Belgium's economy is expected to display relative resilience throughout the remainder of 2023. The National Bank of Belgium predicts a 1.4% expansion for the country's economy as a whole in 2023, driven by easing inflation and a tight labor market.
Conclusion
In summary, Belgium's economic growth in Q2 2023 fell short of expectations due to a contraction in the industrial sector and the influence of rising interest rates. Nonetheless, the services sector and construction output provided some support. Looking ahead, Belgium's economy is anticipated to remain relatively resilient, with modest growth projected for the year.
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