Economy records weakest growth since Q3 2023 in Q4

Economy ends 2024 on a low note: GDP growth waned to 0.2% on a seasonally adjusted quarter-on-quarter basis in Q4 from 0.3% in the third quarter and marked the softest expansion since Q3 2023. On an annual basis, economic growth edged down to 1.1% in Q4 from the previous period's 1.2% expansion. In 2024 as a whole, GDP growth cooled to 1.0% from 2023’s 1.3%.

Moderation driven by private and public spending plus net trade: Domestically, household spending increased 0.9% in the fourth quarter, which was below the third quarter's 1.2% expansion. Moreover, government spending contracted 0.4% (Q3: -0.1% s.a. qoq). On the flipside, fixed investment rebounded, growing 0.1% in Q4, contrasting the 2.2% contraction recorded in the prior quarter. Externally, net trade detracted from overall GDP growth, contrasting the prior quarter’s contribution. Exports of goods and services dropped by 0.4% seasonally adjusted quarter on quarter in the fourth quarter (Q3: -2.0% s.a. qoq). Meanwhile, imports of goods and services contracted at a slower rate of 0.2% in Q4 (Q3: -2.1% s.a. qoq).

GDP growth to stabilize, but external risks loom: Economic growth is set to hover near Q4’s level in 2025 on a sequential basis, keeping full-year growth close to 2024’s level in turn. While stronger momentum in the EU should lead to a softer contraction in exports, domestic demand is set to lose steam amid the new government’s plans to cut spending. Higher-than-expected U.S. tariffs and weaker-than-anticipated momentum in the EU are key downside risks to the outlook given that exports are worth almost 90% of GDP.

Panelist insight: EIU analysts said: “In the near term, economic activity will be held back by still-tight monetary policy (interest rates will continue to fall slowly, but will remain elevated), which will weigh on investment activity. Belgium's export-oriented economy (goods and services exports accounted for nearly 87% of GDP in 2023) will still feel the impact of sluggish external expansion through weak export growth and a loss of competitiveness due to wage indexation. […] Nevertheless, automatic wage indexation and lower inflation will continue to support consumer spending power.”

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