While the growth of the European economy slowed down last year, the Belgian economy held up remarkably well, according to figures published by the European Commission on Thursday. With growth of 1.5 percent in 2023 (slightly more than predicted in the autumn), our country outperformed the average growth of 0.5 percent recorded in both the European Union and the eurozone. That average is being dragged down by the sluggish German economy, which shrank by 0.3 percent last year. And the other neighboring countries – France (0.9 percent), the Netherlands (0.2 percent) and Luxembourg (-0.8 percent) also recorded lower growth than Belgium last year.
An important reason for this is the automatic indexation of wages and benefits in our country. As a result, the purchasing power of Belgian families remained at the same level and they continued to consume, at a time when families in other Member States saw their purchasing power decline due to high inflation and put on the brakes on spending.
This protection of purchasing power comes at a price and means that our country has the second largest budget deficit in the EU, according to previous figures. Our government debt is also much higher than average at almost 106 percent.
Uncertainty weighs
The Commission still expects weak growth in the Union at the beginning of this year, but this could pick up in the course of the year, because inflation is currently falling faster than expected in the autumn of last year. This decline is partly the result of the sluggish European economy and falling energy prices, the Commission notes. On the leading Dutch futures market, the gas price even fell below 25 euros per megawatt hour on Thursday.
Due to falling prices and growing employment, the Commission expects that consumption in our country will continue to increase. She notes that investments by companies have also partly recovered last year after 2022, and that government investments will accelerate in this election year. Imports and exports should also recover this year after the sharp decline in 2023, the Commission writes. This means that our country will also grow slightly faster this year than the EU average: 1.4 percent versus 0.9 percent. From 2025, the Commission expects European growth to accelerate and exceed that of our country.
The Commission emphasizes more than usual that its economic prospects are bathed in “uncertainty”, due to the persistent geopolitical tensions and the risk of a further escalation of the conflict in the Middle East, which could weigh on world trade.
