Brussels – If current policies do not change, Belgium’s budget deficit is predicted to hit 4.9 percent of GDP by 2025. This rise is linked to increasing costs for pensions and social benefits, alongside greater interest expenses related to the refinancing of national debt, which is anticipated to surpass 105 percent by next year. The European Commission highlighted this concern in its most recent economic growth outlook.
After a prolonged period of stagnation, the European economy is starting to display signs of positive growth, although at a slow pace, according to the projections from the Commission. The expected average GDP growth for eurozone nations is 0.8 percent in 2024, climbing to 1.3 percent in 2025 and 1.6 percent in 2026.
Belgium’s GDP growth for 2024 is forecasted to be 1.1 percent. As seen in the eurozone, growth rates are anticipated to reach 1.2 percent in 2025 and 1.5 percent in 2026.
Inflation in Belgium is predicted to reach 4.4 percent this year, making it the highest within the eurozone, according to the Belgian statistical office Statbel, which reported a 4.3 percent rate on Thursday. Croatia closely follows with an inflation rate of 4.0 percent, while the average for the eurozone is recorded at 2.4 percent.
The sharp rise in prices is primarily attributed to the cessation of energy support measures and the indexing of variable electricity and gas contracts, which have rapidly been passed on to consumers. Nevertheless, with inflation projected to decrease to 2.9 percent in 2025 and 1.9 percent in 2026, Belgium is expected to align more closely with the eurozone averages of 2.1 percent and 1.9 percent during the next two years.
In summary, the Commission has expressed concerns regarding the growing budget deficit: projected to be 4.6 percent of GDP in 2024, 4.9 percent in 2025, and 5.3 percent in 2026. This trend is largely due to the absence of new policies resulting from extended federal government negotiations, alongside rising expenditures for pensions and social benefits. Moreover, increased interest expenses linked to growing debt levels and the necessity to refinance maturing obligations are anticipated to exacerbate these challenges.
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