IMF Staff Country Reports

The 2023 Article IV Consultation discusses that though resilient to shocks, the Belgium economy and financial sector face significant cyclical and structural challenges and risks to the outlook. Owing to a strong and timely policy response, the economy resisted the coronavirus disease and energy crises. Meanwhile, an aging population and the climate transition are putting pressure on public finances while low productivity and labor participation are dampening potential growth. Growth is expected to decelerate further in 2024, before returning to potential. Private consumption will normalize, as momentum from wage and social benefit indexation, lower energy prices, and post-pandemic pent-up demand ebbs. Headline inflation is projected to drop in 2023 and return to 4.4 percent in 2024, mostly due to fading effects from energy price support measures. Structural reforms in labor and product markets and further progress in green transition are key to boost potential growth, mitigate the impact of fiscal consolidation, and address medium-term challenges.