Moderate slowdown of the Belgian economy in the short term - Economic Policy

Moderate slowdown of the Belgian economy in the short term – Economic Policy

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The Belgian economy should slow down moderately in the short term, according to the analysis of the Institute of Economic and Social Research (Ires) of UCLouvain. The institute forecasts growth of 2.7% in 2022 and 0.8% in 2023, according to its economic outlook.

Due to the war in Ukraine and retaliatory sanctions against Russia, several upheavals have taken place in the international economic landscape: soaring commodity prices, disruptions in supply chains, tighter monetary and financial conditions…

Due to these shocks, a slowdown in the Belgian economy is inevitable, said the Ires. According to his analysis, however, this slowdown should remain moderate in the short term. The good health of the labor market, the savings accumulated by households during the pandemic and the preservation of purchasing power thanks to the automatic indexation of wages should allow the Belgian economy to resist in the short termsays the institute.

Then, these resilience effects should fade and the Ires expects a virtual stagnation of the Belgian economy at the end of 2022 and during the first half of 2023. At that time, the impact of the tightening of monetary and financial conditions should be felt more.

“In the second half of 2023, assuming an easing of the Ukrainian conflict and an easing of tensions on the commodity markets, the growth of the Belgian economy would strengthen and return to close to its potential level. “

The Ires provides for the creation of 58,000 jobs in 2022 and 35,000 in 2023. According to its projections, the number of job seekers would decrease by 16,000 units this year and 2,500 units next year. General consumer price inflation would rise to 8.4% in 2022 and 5.2% in 2023, while the general government budget deficit would reach 5%.

Due to the war in Ukraine and the retaliatory sanctions against Russia, several upheavals have entered the international economic landscape: soaring commodity prices, disruptions in supply chains, tougher conditions monetary and financial… Because of these shocks, a slowdown in the Belgian economy is inevitable, says Ires. According to his analysis, however, this slowdown should remain moderate in the short term. The good health of the labor market, the savings accumulated by households during the pandemic and the preservation of purchasing power thanks to the automatic indexation of wages should allow the Belgian economy to resist in the short term, says the institute. Then, these resilience effects should fade and the Ires expects a virtual stagnation of the Belgian economy at the end of 2022 and during the first half of 2023. At that time, the impact of the tightening of monetary conditions and financial should be felt more. “In the second half of 2023, assuming an easing of the Ukrainian conflict and an easing of tensions on the commodity markets, the growth of the Belgian economy would strengthen and return to close to its potential level. ” Ires forecasts the creation of 58,000 jobs in 2022 and 35,000 in 2023. According to its projections, the number of job seekers would decrease by 16,000 units this year and 2,500 units next year. General consumer price inflation would rise to 8.4% in 2022 and 5.2% in 2023, while the general government budget deficit would reach 5%.

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