The Belgian central bank cut estimates for the growth of the eurozone’s sixth largest economy in 2022 and 203, due to the impact on consumer spending and trade, from the Russian invasion of Ukraine.
“There is no talk of stagnant inflation. There will be positive growth,” central bank governor Pierre Wunsch said in a video interview.
The bank now estimates that growth in 2022 will be 2.4%, lower than the previous estimate of 2.6%.
For 2023 the forecast has been reduced to 1.5% from 2.4%, while for 2024 it expects growth to be 1.9% from 1.6%.
The central bank would normally have updated its forecasts in June, but said it had made a temporary update to its December estimates to take into account the war and the impact on inflation, which looks set to rise to 7.4% in 2022. higher than the previous forecast by 4.9%.
This would affect consumer spending, especially in the second quarter. Since wages are partly adjusted for inflation, this would also affect Belgium’s relative competitive position, reducing demand for imports from the country’s main trading partners.
The central bank stressed that the fourth quarter of 2021 had proved stronger than expected, offering a higher starting point for 2022, but the impact of the war in Ukraine offset it.
Source: Capital
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