Belgium: GDP increased by 0.3% QoQ in Q1 2015

The flash estimate of the National Bank of Belgium released today showed a modest non-annualized growth of 0.3% QoQ in 1Q 2015 (0.9% YoY). Even if no component data are available yet, one can expect that on the demand side, domestic demand has been once again the only support for growth. Bear in mind that it started to recover in 2013, led by corporate investment, but also by private consumption. Despite a very weak growth of employment and wages, we believe that better economic perspective were sufficient at this stage to stimulate households to increase consumption.

On the contrary, we doubt that external trade was able to support growth in the first quarter of the year. Indeed, confidence indicators showed a temporary deterioration of external trade during the two first months of 2015, weighing on exports and more broadly on the industrial sector. This also seems to be confirmed by global international trade indicators.                             
All in all, the figure released is encouraging. It shows that the weak and gradual recovery is still on track. This seems to confirm what monetary indicators, also released today, show: the Eurozone starts to benefit from lower oil prices, a weaker euro and very accommodative monetary policy.
Having said that, we continue to be quite cautious on Belgian economic growth in 2015, as some budget consolidation is likely to weigh on activity. As a consequence, we expect 1.2% GDP growth this year, below the Eurozone average (1.5%). In this context, it is likely that the budget balance, that has been revised to -3.2% in 2014, will improve only slowly this year, to the tune of -2.7%.

Philippe Ledent

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For more information:

Press office ING Belgium:+ 32 2 547 24 84, pressoffice@ing.be

Philippe Ledent, Senior economist, +32 2 547 31 61, philippe.ledent@ing.be