Short Term Update (STU) is the quarterly newsletter of the Belgian Federal Planning Bureau. It contains the main conclusions from the publications of the FPB, as well as information on new publications, together with an analysis of the most recent economic indicators.
Headlines Belgian Economy
After two years of negative growth, the euro area economy should grow by 1.1% in 2014 and by 1.5% per year during 2015-2019. Belgian GDP growth remained limited to 0.2% last year. In 2014 and 2015, export growth ought to accelerate and domestic demand should pick up (after a decrease in the past two years), resulting in GDP growth of 1.4% and 1.8% respectively. Subsequently, Belgian GDP should grow at 1.6% on average.
After a decrease in 2013 (-0.2%), job creation is expected to remain limited in 2014 (+0.3% or 13 000 new jobs). Net job creation should become greater over the period 2015-2019, reaching 32 000 on average per year. The number of jobs in market services should increase by 192 000 units over the period while the number of jobs in manufacturing industry should continue its decline (-30 000 jobs). The number of unemployed persons (broad administrative concept) should start to decline in 2015. Their number should be reduced by 81 000 over the period 2015-2019. The unemployment rate is thus expected to decrease from 12% in 2014 to 10.8% in 2019.
Belgian headline inflation, which is measured by the national index of consumer prices, dropped to 1.1% in 2013 and should amount to 0.7% in 2014 due to lower energy prices. Energy prices should also slow down inflation in 2015 (1.1%), but to a lesser extent. In the context of a moderate rise in international energy prices, Belgian inflation ought to rebound, but not exceed 1.5% on average during the period 2016-2019.
The general government’s deficit was significantly reduced to 2.6% of GDP in 2013, which is below the 3% threshold for the first time since 2009. In early June, the European Commission accordingly issued a recommendation to the EU Council to abrogate the excessive deficit procedure launched against Belgium in 2009. This result, obtained in spite of the unfavourable economic situation, is explained by structural as well as one-off budgetary measures. Without additional measures and despite higher economic growth and lower interest charges, the deficit should increase slightly to 2.7% in 2014 and 2.8% in 2015. The deficit should decline thereafter, from 2.5% of GDP in 2016 to 2.2% in 2019. Significant efforts would therefore be necessary to reach an actual surplus of 0.6% of GDP in 2017, as planned in the Stability Programme.
STU 2-14 was finalised on 18 June 2014.