PUBLISHED June 28, 2026
Growth Decelerating as Consumption Weakens
According to the European Commission’s 2026 Country Report for Belgium, the country’s economic growth is set to decelerate in 2026, mainly due to weakening private consumption. GDP growth is expected to rebound in 2027, supported by improving domestic demand. The Belgian economy grew by 1% in 2025, mainly driven by robust private consumption, though investment slowed and the contribution of net exports remained negative. Real GDP increased by just 0.2% in the first quarter of 2026, and decreasing consumer confidence points to a further slowdown in the second quarter.
Inflation Climbs on Energy and Services Pressures
Inflation is forecast to rise in 2026, driven by higher energy prices stemming from the conflict in the Middle East, before decreasing in 2027 due to lower price pressures for energy. Headline inflation is projected to rise from 3% in 2025 to 3.4% in 2026. Services inflation is set to remain elevated, fuelled by rising prices for service vouchers, higher university tuition fees and VAT increases on certain products. Headline inflation is projected to ease to 2.6% in 2027 as energy and non-energy industrial goods prices decelerate, though this slowdown will be partly offset by continued upward pressure on services prices.
Household Consumption Under Strain
Private consumption is expected to weaken over the forecast horizon, reflecting reduced purchasing power stemming from higher inflation and lower growth in social benefits. The saving rate is set to remain stable at 12% of disposable income in 2026 and 2027, as households neither draw down savings significantly nor build them up further — a sign that the squeeze on incomes is being absorbed gradually rather than triggering a sharp pullback in spending.
Investment is projected to grow modestly, weighed down by tighter financial conditions, uncertainty stemming from geopolitical tensions and the surge in energy prices. Household investment is expected to decline further in 2026, as building permits continue their downward trend. Exports are expected to slightly recover from 2026 onward, but imports are also projected to pick up, particularly due to defence-related deliveries. As a result, net exports are set to continue contributing negatively to GDP in 2027 as well.
Investment is projected to grow modestly, weighed down by tighter financial conditions, uncertainty stemming from geopolitical tensions and the surge in energy prices. Household investment is expected to decline further in 2026, as building permits continue their downward trend. Exports are expected to slightly recover from 2026 onward, but imports are also projected to pick up, particularly due to defence-related deliveries. As a result, net exports are set to continue contributing negatively to GDP in 2027 as well.
In 2025, the general government deficit increased significantly to 5.2% of GDP, up from 4.4% in 2024, driven by a strong decline in revenues — mainly from income and wealth taxes — combined with higher expenditure, particularly on defence and social benefits. The deficit is projected to stabilise at 5.2% of GDP in 2026, mainly due to measures taken by the federal and regional governments to contain spending and increase revenue. However, the deficit is expected to rise again in 2027 due to higher defence and interest expenditure, undoing much of the stabilisation achieved the year before.
General government gross debt stood at 107.9% of GDP at the end of 2025. The structurally high general government deficits are the main driver of the projected increase in the debt-to-GDP ratio, which is set to climb to 112.8% by 2027. The forecasted high levels of deficit translate into a further increase in an already elevated debt burden — a trajectory that leaves Belgium with progressively less fiscal room to respond to future shocks, even as the current energy crisis proves more containable than initially feared.
One mitigating factor for Belgium, as highlighted by the OECD’s parallel assessment, is the country’s lower reliance on gas-fired electricity generation, which means wholesale electricity prices are less closely tied to gas and leaves the economy somewhat less exposed to higher and more volatile energy costs than peers such as Italy or Ireland. Belgium’s relatively tight labour market, with unemployment remaining low by historical standards, also provides a buffer for household incomes that helps sustain consumer spending. But these structural advantages do little to address the underlying fiscal vulnerability that the Commission continues to flag as Belgium’s most pressing medium-term challenge.
In 2025, the general government deficit increased significantly to 5.2% of GDP, up from 4.4% in 2024, driven by a strong decline in revenues — mainly from income and wealth taxes — combined with higher expenditure, particularly on defence and social benefits. The deficit is projected to stabilise at 5.2% of GDP in 2026, mainly due to measures taken by the federal and regional governments to contain spending and increase revenue. However, the deficit is expected to rise again in 2027 due to higher defence and interest expenditure, undoing much of the stabilisation achieved the year before.
General government gross debt stood at 107.9% of GDP at the end of 2025. The structurally high general government deficits are the main driver of the projected increase in the debt-to-GDP ratio, which is set to climb to 112.8% by 2027. The forecasted high levels of deficit translate into a further increase in an already elevated debt burden — a trajectory that leaves Belgium with progressively less fiscal room to respond to future shocks, even as the current energy crisis proves more containable than initially feared.
One mitigating factor for Belgium, as highlighted by the OECD’s parallel assessment, is the country’s lower reliance on gas-fired electricity generation, which means wholesale electricity prices are less closely tied to gas and leaves the economy somewhat less exposed to higher and more volatile energy costs than peers such as Italy or Ireland. Belgium’s relatively tight labour market, with unemployment remaining low by historical standards, also provides a buffer for household incomes that helps sustain consumer spending. But these structural advantages do little to address the underlying fiscal vulnerability that the Commission continues to flag as Belgium’s most pressing medium-term challenge.
