Belgium

Belgium’s economy showed resilience through the pandemic and energy shocks, maintaining modest but steady growth. Activity picked up modestly in the third quarter of 2025 to +0.3% q/q, following +0.2% growth in the previous quarter, driven by strong rebounds in construction and industry, though household consumption grew slower. Heightened global uncertainty has prompted households to increase precautionary savings, pushing the savings rate up to 12.9% in the second quarter of 2025. Annually, GDP rose by +1.1%, supported by increased fixed investment and government spending, with services also picking up. Automatic wage indexation and lower inflation will support private spending. Looser financial conditions compared with 2023-24, NGEU resources (Belgium’s is nearly EUR6 billion) and reduced trade uncertainty will support investment growth. Against this backdrop, we expect economic growth to accelerate to +1.3% in 2026 and +1.4% in 2027.

Inflation dynamics are improving gradually, although underlying pressures in services persist. The overall moderation reflects a marked slowdown in goods inflation, driven by lower energy commodity prices and subdued imported inflation. But services inflation is set to remain relatively elevated, supported by increases in service-voucher prices and public transport tariffs. Overall, inflation is forecast to ease further to 1.9% in 2026-2027. Automatic wage indexation has helped to cushion the impact of price shocks on consumers.

The labor market remains robust but shows some signs of cooling, with the unemployment rate up to around 6.0% (compared with 5.3% in December 2019). Moreover, labor is less seen as a constraint to production and the vacancies rate, albeit still one of the highest in Europe, decreased below pre-pandemic levels. 

NGEU funds could offer some support to the economic outlook in the coming quarters, with around 40% of the allocated resources still to be disbursed. The accompanying reforms aim to tackle structural bottlenecks to durable and sustainable growth, while the planned investments are designed to accelerate the shift toward a more sustainable, low-carbon and climate-resilient economy. They also seek to maximize the benefits of digital transformation and strengthen social cohesion. In addition, the plan targets enhanced labor-market performance alongside efforts to make public spending more efficient and fiscally sustainable. Total allocated funds amount to EUR5.9bn, including EUR264mn in loans.

Belgium’s industrial sector continues to grapple with persistent headwinds as manufacturing sentiment remains muted amid global trade uncertainty, cyclical pressures and deep-rooted structural challenges. While services and construction have recorded modest gains, industrial activity has largely stagnated. In 2024, the sector accounted for 13.2% of Belgian gross value added in current prices, with pharmaceuticals (23.0%), food (16.2%), chemicals (12.0%) and metals (10.5%) together representing nearly two-thirds of the total. Yet even these heavyweight industries are showing limited dynamism. The pharmaceutical sector—traditionally a pillar of resilience —has been weakened by intensifying international competition and softer demand following cuts to US humanitarian aid programs. Chemicals remain flat and food processing, though stable, lacks forward momentum. Many firms are prioritizing cost controls, directing investment mainly towards environmental upgrades required by regulation rather than toward growth-oriented innovation. An exception is defense-related manufacturing, where increased military spending has boosted turnover and improved the outlook for companies operating in this niche. 

Belgium remains an extremely attractive place to invest. The country is strategically situated at the heart of Europe and is home to many EU institutions, NATO and numerous multinational company headquarters. It has an international rail, air and shipping infrastructure that makes it one of the best locations for industry and logistics.