Belgium: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Belgium

IMF Staff Country Reports, December 8, 2023

Source details

Canonical URL: Belgium: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Belgium

The 2023 Article IV Consultation finds that, though resilient to shocks, the Belgium economy and financial sector face significant cyclical and structural challenges and risks to the outlook.
Strong and timely policy responses enabled the economy to resist the coronavirus disease and energy crises.
Medium-term pressures include an aging population and the climate transition weighing on public finances, and low productivity and labor participation dampening potential growth.
Structural reforms in labor and product markets and further progress in the green transition are identified as key to boost potential growth, mitigate the impact of fiscal consolidation, and address medium-term challenges.

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.

An aging population and the climate transition are putting pressure on public finances, necessitating fiscal consolidation efforts.
Financial sector resilience noted, with Financial Sector Assessment Program (FSAP) stress tests and analysis referenced among subjects.

Implement structural reforms in labor and product markets to raise potential growth.
Advance the green transition to mitigate fiscal pressures and support medium-term sustainability.
Conduct fiscal consolidation while mitigating adverse impacts through growth-enhancing reforms.

Subjects: Energy prices, Financial Sector Assessment Program, Financial sector policy and analysis, Fiscal consolidation, Fiscal policy, Fiscal stance, Inflation, International organization, Monetary policy, Prices
Keywords: Belgium economy, Energy prices, Financial Sector Assessment Program, Fiscal consolidation, Fiscal stance, FSAP stress tests, General government balance, General government statement, Global, government formation, Inflation, money market rate