Slow recovery still on track

In Q1 2015, Belgian economic activity has grown by 0.3% QoQ (0.9% YoY), in line with the first estimate. That said, some additional information is given by the new released decomposition of GDP. On the supply side of the economy, GDP growth is mainly driven by the service sector, while activity declined by 0.8% in the construction sector.

On the demand side, GDP growth is almost equally supported by domestic demand and external trade. After a disappointing last quarter of 2014, exports recovered somewhat in Q1 2015 (+0.4% QoQ). As a consequence, and even if at the same time imports increased somewhat too, external trade contributed positively to growth. More interestingly, private consumption increased by 0.7% QoQ in the first quarter of 2015. This reflects a clear recovery of households’ spending: over the last three quarters, private consumption increased by not less than 1.8%. On the other hand, one could be disappointed by the 0.9% contraction of corporate investment in Q1 2015. But bear in mind that this number is still disturbed by some particular investments made last year. The level of investment shows more clearly the actual dynamic of corporate investment: at the exception of the third quarter of 2014, it is in Q1 2015 at its highest level since 2008.

All in all, the decomposition of GDP numbers released show that the two engines of the Belgian economy are running again. Having said that, the growth pace is still too low to boost the labor market: only 7,000 new net jobs were created in Q1 2015, while one would need more than 15,000 jobs creation in order to push the unemployment rate down.

To conclude, the slow recovery of the Belgian economy is once again confirmed. In this context, we expect a 1.2% GDP growth this year. Next year, it could increase to 1.6%.

Philippe Ledent

Senior economist

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For more information:
Press Office ING Belgium, 02 547 24 84, pressoffice@ing.be
Philippe Ledent, Senior economist, +32 2 547 31 61, philippe.ledent@ing.be