The latest NAI statistics place Belgian real GDP growth at 0.2% for the second quarter of 2023, somewhat below the estimate in the June 2023 BCM (0.4%) and the growth rate recorded in the first quarter of the year (0.4%).

In the second quarter, GDP benefited once again from solid growth in private consumption and services. Household consumption should continue to grow at a strong - but perhaps slightly more moderate - pace in the current quarter, as purchasing power rebounds sharply.

Business investment in volume terms expanded very strongly yet again in the second quarter and is expected to continue to increase in the third quarter, albeit at a somewhat more moderate rate. Residential investment clearly shrank in the second quarter and is likely to decline further in the third quarter.

Government consumption surprised on the downside in the second quarter but should now return to (moderate) positive growth, while government investment is expected to pick up pace, boosted by the roll-out of partly European-funded investment plans and the usual electoral cycle. The contribution of net exports to growth is expected to remain negative in the third quarter.

The NBB’s BREL nowcasting model currently estimates growth in the third quarter at 0.2%, while the R2D2 model remains clearly more optimistic, predicting a growth rate of just over 0.5%. It should be noted that these nowcasts are highly uncertain as the massive shocks since the start of the COVID-19 crisis still constitute a challenge for estimation by standard time-series models.

All in all, we currently expect economic activity to expand by 0.2% in the third quarter of 2023. This is about in line with the BREL nowcast, but clearly below the estimate of R2D2. Negative risks, mostly pertaining to a stronger-than-expected slowdown in private consumption over the summer, are unlikely to have a substantial impact on overall growth. A decrease of activity in the third quarter seems unlikely at the moment.