Brussels (Brussels Morning) – The Federal Planning Bureau forecasts Belgium’s deficit to rise, reaching 5.8% of GDP by 2029. Economic growth remains stable, but challenges persist with job creation and inflation.
A few days after the elections, the Federal Planning Bureau has once again put its finger on the wound: without a policy change, the government deficit will increase significantly in the coming years. Although the Planning Bureau is less pessimistic than the National Bank.
What Are the Economic Forecasts for Belgium’s Future?
Just before the elections, the National Bank already sounded the alarm: without adjustment, the central bank assumes a budget deficit of 4.8 per cent in 2024, 5.3 per cent in 2025 and 5.5 per cent in 2026. Governor Pierre Wunsch pointed out that the dynamics of the electoral campaign were “not encouraging” in addressing the deficits.
Why Are Deficits Projected to Rise Despite Economic Growth?
The Federal Planning Bureau estimates a deficit of 4.5 per cent of the gross domestic product this year, followed by 4.9 per cent in 2025 and 5.3 per cent in 2026. By 2029 the deficit would amount to 5.8 percent. According to EU rules, member states must limit their deficit to a maximum of 3 per cent.
The new governments therefore face a difficult task. “Expressed in billions, a deficit of 4.5 per cent means approximately 31 billion euros, and a deficit of 5.8 per cent amounts to 40 billion euros,” said Planning Bureau economist Michel Saintrain during the presentation of the prospects. He warned that there are still a number of uncertainties surrounding the forecast. For example, the financial terms of the agreement that the government concluded with energy company Engie on the extension of two nuclear power stations were not taken into account.
How Stable Is Belgium’s Economic Growth Expected to Be?
The Belgian economy will continue to grow stably in the coming years, the Planning Bureau expects. GDP growth would reach 1.4 per cent in 2024 and would then continue at virtually the same pace until 2029. Inflation would still average 3.1 per cent this year and only fall below the 2 per cent target in the course of next year’s valleys.
What Challenges Does Belgium Face in Job Creation?
According to the Planning Bureau, job creation remains limited this year, with an increase of 27,000 people. From 2025, job creation is expected to increase to an average of 43,000 people per year. The growth is mainly in the companies. The employment rate could increase from 72.1 per cent in 2023 to 74.1 per cent in 2029.
