Special Report-en-01-04-2019-Belgium : Gradual slowdown

After hitting 1.7% on average in 2017, growth of the Belgian economy slowed to 1.4% in 2018. This slowdown mostly reflects external factors and the domestic picture in Belgium remains relatively robust. In 2018, Belgian growth was bolstered by v igoro us investment spending , whose growth picked up slightly from 1.8% in 2017 to 2% in 2018, driven by the acceleration in public investment and the recovery in residential investment (+0.7% after zero growth in 2017), while corporate investment held up quite well (+1.9% after 2.3% in 2017). As expected, foreign trade contributed positively to Belgian growth, by 0.7 percentage point of GDP in 2018. This is explained by the less pronounced slowdown in exports relative to imports, while both nevertheless were affected by the weakening of international trade in 2018. Beyond the negative contribution of inventories to growth, the Belgian economic slowdown since 2018 has mainly been due to the faltering and then the gradual decline in private consumption, hit by the gradual return of a high level of inflation, which exceeded 3% in October 2018. This high inflation has had a negative impact on consumption despite the good momentum of job creation. In 2019, growth is likely to remain relatively stable, while weakening slightly from 1.4% to 1.3% in 2019 due to the political calendar. Since 21 December 2018, Belgium has been managed by a caretaker government that has a budget based on the provisional twelfths system until 26 May, when the next regional, federal and European elections will take place.