Real GDP growth is projected to slow to 0.9% in 2023, before picking up to 1.4% in 2024. Inflation, tighter financing conditions, and high uncertainty will drag on domestic growth, while weak global trade prospects will weigh on net exports. By contrast, public investment, solid labour demand and automatic wage indexation will sustain activity. Headline inflation is projected to fall to 4% in 2023, due to falling energy prices, and 3.7% in 2024.
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Read full country noteBelgium’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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Read full country note2021 Structural Reform Priorities