Belgian economic activity is expected to increase by 0.5 % in the first quarter of 2021
Brussels, March 2021 – Belgian GDP declined marginally by 0.1 % in the fourth quarter. While this was somewhat better than expected, it is likely partly due to a temporary Brexit stockpiling effect pushing up exports. The reversal of this temporary effect should depress growth at the start of 2021.
We expect private consumption to recover in the first quarter of 2021, but the rebound should remain very partial. While consumer confidence is approaching pre-COVID-levels and the fundamentals for private consumption remain solid, many restrictive measures limiting consumption are still in place. In addition, consumer demand is likely to still be depressed by remaining concerns about infection risks and some precautionary saving due to the uncertainty about the labor market situation after the removal of the government measures.
Business investment growth is expected to remain positive in the first quarter of 2021, in line with the recent broad-based improvement in the overall business sentiment indicator. Government and housing investment should also continue to expand in the first quarter of 2021.
The contribution of net exports to GDP growth is expected to be negative in the first quarter, despite the ongoing recovery in global trade. This mostly reflects a reversal of the aforementioned temporary UK stockpiling effect, but is also the result of the expected increase of import growth on the back of positive domestic demand growth
The NBB nowcasting model “BREL” predicts a quarterly growth rate of about 0.45 % in the first quarter of 2021, while the “R2D2” model is more pessimistic and estimates growth to be around zero. The uncertainty of these nowcasting models is exceptionally large in the current circumstances, as the massive shocks since the start of the COVID-19 crisis constitute a challenge for the estimation of standard time-series models. Therefore, these model-based estimates need to be complemented with information gathered from other sources, as well as expert judgment.
All in all, we estimate that Belgian economic activity will increase by 0.5 % in the first quarter.