Banque nationale de Belgique : Economic projections for Belgium – Autumn 2021

According to the NBB's autumn projections, the Belgian economy is set to slow down and should barely grow at all in the short term because of supply problems, rising (energy) prices and the deterioration of the public health situation. As the logistic supply chain and health risks ease, economic growth should temporarily come in more fiercely again, from spring 2022.

The labour market remains highly robust: job creation moderates but remains positive. Inflation has risen considerably in recent months, under the impact of mounting energy costs, and is not likely to drop back below 2 % until the end of 2022. Temporarily high prices will trigger a strong increase in labour costs through the wage index-linking mechanisms. Labour cost growth in 2022 is projected to reach unprecedented levels, thereby deteriorating the economy's competitiveness. Higher labour costs are expected to be partly absorbed by smaller profit margins for firms.

This element, combined with the assumed decrease in energy prices and the gradual normalisation of supply chains after the spring of 2022, should prevent an actual wage-price spiral from occurring.

Lastly, the budget deficit is expected to remain unsustainable over the next few years, at a rate of at least 4 % of GDP, with no change of policy. Government debt is on an uptrend, too.