National Bank says that the war in Ukraine should not cause a serious recession in Belgium
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Loading... - Melanie De Smet
- 28 Mar 2022
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In the wake of Russia’s attack on Ukraine the National Bank of Belgium decided to publish an update of its macroeconomic projections, taking into account the impact of the war on the economy here.
NBB now forecasts “sharp temporary slowdown in the economy”, whereby the Belgian economy will experience less strong growth than had been previously forecast. Slight negative growth is now expected during the second quarter. However, strong growth during the final months of the year should make it possible to end 2022 with growth of 2.4%. This is 0.2 percentage points lower than the 2.6% that had been originally forecast for growth in 2022.
The National Bank of Belgium has significantly revised down its growth forecast for next year. BNB now forecasts growth of 1.5 in 2023, 0.9 percentage points down on its original forecast of 2.4% growth during next year.
The war in Ukraine would thus have a cumulative impact, over two years, of one percent on our economy, according to the national bank.
Impact on inflation
The impact of the war on the inflation forecast is also strong. The sharp rise in inflation is now forecast to flatten off more slowly than had been originally forecast. By the end of the year inflation will still be around 5%. Looking at the year as a whole inflation should average 7.4%.
There is some good news though as "Current projections do not suggest a long-term wage-price spiral: inflationary pressure would reduce over the next two years", the BNB concludes. If the forecast prove to be correct Belgium will not be confronted with so-called “stagflation” where slow economic growth in combined with high inflation. Read More...
