The new forecasts from the National Bank of Belgium (BNB) are rich in lessons, not all positive.
The Belgian economy is holding up rather well and the BNB is counting on growth of 1% for this year, i.e. above the 0.7% of the European Union. For the following three years, it would oscillate between 1.2 and 1.4%.
The industry is suffering, as evidenced by numerous restructurings and the falling production capacity utilization rate, but domestic consumption, driven by strong wage indexations, is compensating. The unpleasant surprise of the forecasts comes from inflation which amounts to 4.3% in 2024.
Driven by energy and food contracts
It is driven by energy and food contracts. But the BNB also highlights the impact of the increase in the price of service vouchers in Flanders (1 euro, or 10% from January 1, 2025). All the factors imply that salaries will increase by 3.5% next year instead of 2.5%.
The BNB continues to drive the point home on the automatic indexation of salaries which causes our salaries to rise faster than those of our neighbors. However, this gap, underlines the BNB, must be eliminated. According to its governor, Pierre Wunsch, there is therefore no room for conventional salary increases next year. We'll see what the Central Economic Council, which officially sets it, thinks…
The BNB also mentions a job market which is holding up better than expected and public finances which require radical restructuring. It should be noted here that the forecasts do not take into account either a possible Trump effect or the decisions of the next federal government.
