Belgium's economic growth to contract sharply in 2023, warns IMF

Belgium's economic growth to contract sharply in 2023, warns IMF
IMF. Credit: Belga

The accumulation of economic problems is threatening to plunge the world economy into recession, with the International Monetary Fund (IMF) predicting a serious slowdown in growth for Belgium in 2023, to 0.4%.

The IMF expects the global economy to grow by 3.2% this year, but it revised the expected growth downwards (from 2.9% to 2.7%) for next year – the "weakest growth since 2001," aside from the 2008 global financial crisis and the peak of the Covid-19 pandemic.

"In short, the worst is yet to come," the IMF's economist Pierre-Olivier Gourinchas said on Tuesday. "For many people, 2023 will feel like a recession. Many families and companies will end up in stormy waters next year."

For the Belgian economy, the IMF expects slightly more growth this year than previously thought: 2.4%, compared to 2.1% in April.

However, a significant slowdown would follow in 2023, to just 0.4%, instead of the 1.4% predicted in April. This makes the IMF much more pessimistic than the National Bank, which in June still assumed 1.5% growth in Belgium's gross domestic product (GDP) in 2023.

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For Germany (the largest economy in the Eurozone), the IMF predicts that the economy will shrink by 0.3% next year. For the United States (the world's largest economy), the IMF is not expecting it to shrink, but it does predict slowed growth of 1% in 2023.

The IMF speaks of a recession when the economy shrinks for two quarters in a row. Earlier, CEO Kristalina Georgieva said that "countries that account for about a third of the world economy" are at risk of ending up in that situation.

As an explanation, the IMF cited the combination of various economic problems, such as high inflation, the uncertainties caused by Russia's war in Ukraine, the zero-Covid policy in China, as well as uncertainty in the Chinese real-estate sector.

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