According to the NBB’s spring projections, the Belgian economy will continue to grow rather vigorously in the short term. Annual growth is expected to reach 1.4% in 2023. In the medium term, growth is expected to slow to 0.3% on a quarterly basis, or 1.2% on an annual basis, in line with potential, as the impact of the labour shortage intensifies. More sustained GDP growth will essentially require a more marked increase in productivity or greater labour market participation.

Headline inflation has already fallen noticeably since the autumn, thanks to a sharp decrease in international gas prices. Underlying price pressures and food inflation are expected to ease more gradually. Indexation mechanisms, reacting with a certain time lag, are likely to further push up wage costs, by 8% this year. In four years, hourly wage costs are set to rise more in Belgium - by almost three percentage points - than in the country’s three main neighbours, which will have a negative impact on cost competitiveness.

Finally, the budget deficit is projected to remain unsustainably high over the next few years and to widen again in 2023. With unchanged policy, the deficit will still be close to 4.7% of GDP in 2025. Public debt continues to follow an upward trajectory.