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Eco Perspectives // 1 quarter 2021
economic-research.bnpparibas.com
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9
BELGIUM
STRUCTURAL IMPACT LIMITED SO FAR, BUT EVENTUALLY BILL COMES DUE
We expect the Belgian economy to lose 7.2% of its size this year, followed by a 3.8% increase next year. After a strong
recovery in the third quarter, private consumption is expected to decline again at the end of this year, but not as much
as during the first lockdown. So far, structural damages seem to have been mainly avoided, with bankruptcies close
to their normal level and unemployment rates stable since the beginning of the year. Government support measures
have no doubt played a crucial role in this but once these measures are discontinued, some long term scarring will
take place.
At the end of the first half of this year, Belgian quarterly real GDP
was 15% below the level of the last quarter of 2019. Upward revisions
of the national accounts, for both the first and the second quarters,
fuelled a more optimistic outlook. This was seemingly reinforced by a
higher-than-expected growth rate for the third quarter, coming in at
GROWTH AND INFLATION (%)
GDP Growth
Inflation
Forecast
Forecast
1
1.4% quarter-on-quarter.
3.8
3.8
3
.5
.5
The uptick in new cases at the beginning of the fourth quarter and
the subsequent increase in countermeasures however paint a less rosy
picture. We expect lower economic activity in the last quarter of this
year and it remains to be seen if a technical recession can be avoided
at the start of 2021.
1
.7
1.7
1
.3
1.4
1
0.5
-
0.5
-2.5
-
-
4.5
6.5
LABOUR MARKET
The unemployment rate has remained stable (around 5%) since the
beginning of the year, which is quite remarkable. In fact, during the
same period the EU-average unemployment rate increased by close to
-
7.2
-8.5
2019
2020
2021
2022
2019
2020
2021
2022
1
percentage point and a similar trend was observed in the neighbou-
SOURCE: NATIONAL ACCOUNTS, BNP PARIBAS FORTIS
ring countries. The expanded “temporary unemployment”-scheme no
doubt played a major part in the standout performance of the Belgian
labour market. In April, when government measures to fight the pan-
demic were at their most stringent, close to 1.2 million people bene-
fitted from this scheme. For September, that number had fallen below
CHART 1
The hardest hit areas are reported in client-facing sectors such as
Events, Accomodation & Food Services and the Non-Food Retail sector.
Aggregated real-time data on retail spending confirms this picture,
with expenditures in the first two weeks of November some 20% below
their normal levels. After private consumption almost posted a full
recovery to pre-crisis levels in the third quarter, a significant decline is
in the cards for the last months of this year.
Still, the impact of this second lockdown is likely to be softer, as
businesses now seem better equipped to deal with more stringent
measures. In November, full time telework was quickly reinstated for
more than 30% of all employees. This closely resembles the situation
in the first lockdown and is well in excess of the 9% reported for
September.
Across the board, firms are fearing a strong increase in bankruptcy risk.
Surveys show that close to 10% could be out of business by the second
half of next year. The main reasons for liquidity problems are thought
to be revenue losses and late payments, with insufficient credit lines
so far less of an issue.
The impact on investment plans is significant. For the entire economy,
firms intent to cut back on their pre-covid investment plans by more
than 20%, for both this year and 2021. In the second quarter of this
year this trend was already traceable in the national accounts, with
corporate investment 23% below the level it had reached at the end
of 2019. We do not expect investments to reach this level again before
the end of 2022.
2
00.000, still almost twice as high as the normal level.
During the second lockdown, which was imposed at the beginning of
November, this number is expected to go up again, with more than
half of all companies looking to increase the number of workers they
enlist for the scheme. We expect to see around half a million workers
registered for temporary unemployment by the end of this year. From
the 2nd quarter of 2021 onwards this number should slowly drop again.
At that point, the actual unemployment rate will be creeping upwards
as government support measures are expected to come to an end. All
in all, we expect to see the unemployment rate peak well above 7%
by the start of 2022. Even though an estimated number of 140.000
people losing their job will cause significant economic hardship, the
unemployment rate will be at a similar level than that of 2017.
At that point, halfway through the Michel-I government’s legislation
period, close to 160 000 jobs had been created since the end of 2014.
Just as many were added in the 2 following years. An equally fast pace
of job-creation might be hard to repeat, but the unique stop-start-
character of the current crisis could support a quick rebound.
CORPORATES
In its monthly survey, the National Bank of Belgium (NBB) has been
tracking the negative impact of the health crisis on firms’ turnover
levels. Turnover losses peaked above 30% for the economy as a whole
in the month of April, but this gradually improved to less than 15% in
August. For November, companies expect another deterioration as the
nd
2
lockdown kicks in.
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