Belgian economic update

Flag Belgium

While consumer and producer sentiment indicators in Belgium are still at reasonable levels, they are now well below the record highs that were observed in late 2017. Since Spring, Belgian consumers have been cautious, alternating between a loss and recovery of optimism. In September, the consumer confidence indicator picked up a little again, reversing the previous month’s dip. Producer confidence firmed up a little again in September as well. The improvement in the NBB barometer was only seen in Wallonia, however. In Flanders and Brussels the barometer continued its downward trend. The Flemish figure even declined below the Walloon one in September (figure), the first time since the financial and economic crisis in 2008-2009.

Figuur - Producer confidence in Flanders has fallen below the one in Wallonia (NBB barometer)

Source: KBC Economic Research based on NBB.stat (2018)

As Flanders is a more open economy, it is more vulnerable to a worsening in the international economic environment. In the past, a decline in the Flemish NBB barometer below the Walloon figure often went hand in hand with a slowdown, or even recession, of the total Belgian economy, and vice versa (figure). In the first half of the year, economic activity in Belgium was still, to a large extent, supported by net exports. We believe that this will no longer be the case in the current and next quarters, as export dynamics will gradually slow down. For the full year 2018, the growth contribution of net exports will still be positive, albeit less than in 2017. In 2019 we see net exports contribute negatively to GDP growth. Against this background, real GDP growth in our scenario will slow down from 1.7% in 2017 to 1.5% this year and 1.4% next year.

Figuur - Relative regional development of NBB barometer pointing at a slow down of Belgian GDP growth

Source: KBC Economic Research based on NBB.stat (2018)

(Technical) upward revision of unemployment

Eurostat revised figures for Belgium’s unemployment rate. Previously, the harmonised unemployment rate (which is based on a survey) stood at 6.2% in July. In the new series recently being published, the unemployment rate climbed from a low of 6.1% in January till March to 6.6% in July. The latest figure, for August, was at 6.5%. The Belgian unemployment series often has been quite volatile in the past, subject to many revisions, and hence its recent development must be interpreted with care. Nevertheless, it could be an indication that the decline in the unemployment rate is gradually bottoming out. The year-on-year change in the number of non-working job seekers (an unemployment series based on administrative data) went up strongly as well. This, however, was solely due to a technical revision of the category ‘Autres demandeurs d’emploi inscrits obligatoirement’ in Wallonia, which is part of the group of non-working job seekers but does not receive any unemployment benefits.

Forecasts Belgian economy:

Belgian economic update November

Belgian economic update December