The projections are produced as part of a joint Eurosystem exercise and are based on technical assumptions and international forecasts formulated jointly by the ECB and the euro area central banks. They only take account of measures that have been – or are very likely to be – formally approved and for which the implementing arrangements have been set out in sufficient detail at the cut-off date of the projections. The projection period runs to year t+3 (in this case up to 2023); the margin of error surrounding the projections is wider for the later years, partly owing to the greater uncertainty about the assumptions, especially those concerning the international environment. Owing to the uncertainty surrounding future developments with the COVID‑19 health crisis and about the revival of demand, these projections come with considerable risks, both upside and downside.
The latest projections for Belgium, published on 14 December 2020, were finalised on 25 November 2020. The corresponding results for the euro area are published on a dedicated webpage on the ECB’s website.
This year, economic activity in Belgium is down by 6.7 %, under the impact of the restrictions imposed to stop the spread of the COVID-19 pandemic. As the containment measures are relaxed once again and assuming that an effective medical solution, such as a vaccine against the virus, can be confirmed and rolled out as of early next year, a gradual recovery of more than 3 % per annum should be observed over the next two years, driven mainly by household consumption. However, the recovery of business investment will take a bit longer and net exports are expected to weigh on growth over the following years. The coronavirus crisis also has an impact on the labour market: around 100 000 jobs will have been lost by Autumn 2021. The unemployment rate, which was at an all-time low just a year ago, is projected to rise to more than 7 %. Inflation should work out at only 0.4 % in 2020, primarily because of the fall in energy prices. By the year 2023, it is expected to rise to 1.9 %. The government deficit is estimated at 10.6 % of GDP in 2020, after which it should contract although is likely to remain at around 6 % of GDP.
Projections for Belgium: summary of the main results