GDP growth is projected to slow considerably from 2.9% in 2022 to 0.5% in 2023 in the face of high inflation and heightened uncertainty, before picking up to 1.1% in 2024. Private consumption will remain weak until mid-2023 despite the automatic indexation of wages, which supports household purchasing power.
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Belgium’s recovery from the COVID-19 pandemic has been robust thanks to extensive policy support. However, the new shock from the war in Ukraine is exacerbating inﬂation, and supply and labour market shortages, highlighting the importance of boosting the resilience of the Belgian economy. Medium-term ﬁscal sustainability challenges should be addressed by limiting early exit possibilities from the labour market, improving the efﬁciency of public spending, in particular through spending reviews, and boosting the coordination of ﬁscal policies by all levels of government to create room for public investment.
Improving business dynamism will be key to revive productivity growth and job creation in recovery. Reforms are hence needed to lower barriers to entry but also smooth the restructuring of firms and exit of non-viable ones. A more flexible labour market and activation policies will ensure the conditions for productive firms to grow and increase inclusiveness.
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2021 Structural Reform Priorities