Economic activity in Belgium is expected to slow down to 0.8% in 2025, mainly due to high global uncertainty and decreased exports. It is projected to increase slightly to 0.9% in 2026, supported by improving external demand. Inflation is forecast to decrease to 2.8% in 2025 and 1.8% in 2026, driven by lower price pressures for industrial goods and energy. The government deficit is projected to increase over the forecast horizon due to rising expenditure, mainly on ageing related costs, defence and interest payments. Therefore, the government debt is also expected to continue its increasing path.
| Indicators | 2024 | 2025 | 2026 |
|---|---|---|---|
| GDP growth (%, yoy) | 1,0 | 0,8 | 0,9 |
| Inflation (%, yoy) | 4,3 | 2,8 | 1,8 |
| Unemployment (%) | 5,7 | 6,1 | 5,8 |
| General government balance (% of GDP) | -4,5 | -5,4 | -5,5 |
| Gross public debt (% of GDP) | 104,7 | 107,1 | 109,8 |
| Current account balance (% of GDP) | -0,2 | -0,7 | -1,0 |
Economic activity is set to slow down this year
The Belgian economy grew by 1% in 2024, mainly supported by strong private consumption despite weakened purchasing power. Investment increased only moderately, and while both exports and imports declined, net export had a slightly positive contribution to growth. GDP growth remained robust at 0.4% q-o-q in the first quarter of 2025.
Domestic demand is expected to slow down in 2025, with a further moderation anticipated in 2026. Decelerating employment growth and declining consumer sentiment are projected to weigh on private consumption. Consequently, the saving rate is forecast to decrease only moderately to around 12.6% of disposable income in 2026. Investment is set to increase by 0.5% in 2025 and 1.2% 2026, respectively. While construction is set to expand, uncertainties in the external environment are expected to hold equipment investment back. The introduction of US tariffs is projected to adversely affect Belgian exports, the US being Belgium's fourth largest export market, especially in the pharmaceuticals sector (exempted from tariffs so far), machinery and equipment, and transport-related sectors. Imports are set to decrease less than exports, resulting in a negative contribution of exports to growth in 2025. Following a contraction in 2025 exports and imports are expected to rebound in 2026, driven by the expected mild improvement of the external environment.
Overall, the economic activity is forecast to grow by 0.8% in 2025, followed by a mild recovery of 0.9% in 2026.
Unemployment set to increase this year
Employment growth eased to 0.3% in 2024, mainly due to a further decline of employment in the industrial sector. Although it is set to remain modest over the forecast horizon, a pick-up is projected in 2026, notably driven by the reform of the unemployment benefit system. The unemployment rate is set to rise to 6.1% in 2025, alongside the slowdown of economic activity, before decreasing in 2026. Labour market participation is forecast to increase due to the rise of the statutory retirement age. Wage growth is set to ease gradually, following the decrease in inflation.
Gradual decrease of inflation
Headline inflation is projected to decline from 4.3% in 2024 to 2.8% in 2025. Goods inflation is set to significantly slow down, supported by decreasing energy commodity prices and low imported inflation. However, services inflation is projected to remain more elevated in 2025, notably driven by the increase in service vouchers and public transport prices. Inflationary pressures are projected to ease further to 1.8% in 2026, with all the components registering a slower growth in prices.
Government debt to trend up on the back of high deficits
In 2024, the government budget deficit increased to 4.5% of GDP. Although the budget benefited from the phase-out of the support measures related to the energy crisis (0.4% of GDP), high ageing-related costs, interest payments and gross fixed capital formation pushed up the deficit.
In 2025, the deficit is forecast to increase to 5.4% of GDP. The further widening of the deficit is due to expenditure growth, as revenue remains stable at around 50% of GDP. Primary expenditure is projected to increase more than GDP, driven by ageing-related costs (+0.5% of GDP) and defence (+0.4% of GDP). In addition, interest expenditure is forecast to increase further due to higher debt and refinancing rates (0.1% of GDP). On the revenue side, taxes on income and wealth are expected to increase (+0.2% of GDP), while taxes on production and imports are projected slightly lower (-0.1% of GDP). The latter is mainly driven by measures adopted at the regional government level.
In 2026, the deficit is set to continue its upward trend, reaching 5.5% of GDP. This is mainly driven by higher interest expenditure (+0.2% of GDP) and contributions to the EU budget (+0.2% of GDP), while the new government measures for the labour market, pensions and taxation are estimated to have a positive impact on public finances. Revenue as a percentage of GDP is projected to remain stable also in 2026.
General government gross debt stood at 104.7% of GDP at the end of 2024. It is projected to increase over the forecast period, reaching 107.1% of GDP in 2025 and 109.8% in 2026. The persistence of high general government deficits explains this upward trend.