The Belgian economy contracted by 0.5% in the second quarter of 2012, according to statistics released by the National Bank of Belgium (NBB) on Friday, September 7. These results, while better than expected, still represent a year-on-year decrease of 0.3% in GDP.
NBB analysts see reason to be optimistic in so far as the losses are mainly attributable to a decline in domestic demand and not the international trade balance. In fact, Belgium’s net exports actually grew by 0.4% in the quarter, as a drop in exports was outstripped by an even sharper fall in imports. The decline in imports is largely due to a reduction of domestic stocks.
Industry was the hardest hit sector with a 1.7% drop in added value. The service and construction sectors fared better, although both still recorded declines. Belgian families meanwhile consumed on average 0.4% less than the previous quarter. Public spending was also restrained. Spending on consumption fell by 0.2%, while a significant 3% less was spent on investments.
All of this has a direct consequence on the Belgian labor market: employment fell by 0.1% in the quarter.
These results come amidst a general economic downturn in many developed countries. The latest economic figures do not, however, indicate Belgium is in recession. A technical recession is two consecutive quarters of contraction. During the first quarter of 2012, the Belgian economy showed positive growth rates.
AmCham Belgium’s position
AmCham is somewhat reassured by this news and is convinced that a focus on job creation and a thriving economy is indispensable for Belgium, in order to keep its position as an attractive country for companies and investors. Through investments in the economy, tax revenues will increase and the Belgian government would be able to master its deficits as well. Furthermore, AmCham Belgium believes that by increasing employment rates, Belgium will be able to attract and retain highly qualified workers, and thus hold a strong position in the ongoing “war for talent”.