Private consumption and business investment are set to continue driving a robust economic rebound. GDP growth is projected to reach 3.2% in 2022 before reverting towards potential at 1.4% in 2023. The labour market has recovered, with the unemployment rate expected to peak at 6.6% in 2022 and then decline. Labour and skill shortages in key sectors could weigh on growth. Inflation is edging up and rapidly rising energy prices could fuel wage inflation through indexation.
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
The latest OECD Economic Survey of Belgium notes that robust job creation, albeit mostly in low-wage industries, has led to the unemployment rate falling to a historic low. Economic growth has been steady, but remains below average euro area levels, and productivity growth has stagnated. Future reforms should seek to lower employment barriers to disadvantaged groups, help innovative businesses to thrive, and further ease pressures on public finances.