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02 Mar 2023
IMF Executive Board Concludes 2022 Article IV Consultation with Belgium
Growth is expected to slow from 3.0 percent in 2022 to 0.2 percent in 2023, before returning to potential of 1.2 percent over the medium term. Inflation should decelerate from 10.3 percent in 2022 to 5.5 percent in 2023, as energy prices ease. Indexation has opened a wage gap with key trading partners, posing challenges for competitiveness. With aging and social-benefit pressures and in the absence of adjustment measures, the structural fiscal deficit is expected to remain elevated over the medium term at 5½ percent of GDP and high public debt will also rise to about 120 percent of GDP in 2028, increasing vulnerabilities. Risks are tilted to the downside, related to escalation of the war in Ukraine and a sharper-than-expected tightening of financial conditions. Lower energy prices would reduce fiscal pressures, and with progress on structural reforms before elections in 2024, boost confidence.
