The Belgian economy appears to be heading for a short, limited recession in the second half of this year and possibly early next year, according to the National Bank of Belgium, BNB.
The bank's assessment is based on a survey it conducted at the end of last month, in collaboration with employers' organisations, among more than 4,500 companies and self-employed persons.
Significant increases in operational costs, due to rising energy prices and rapid wage indexation, are slowing economic activity, with many companies cutting production as their profitability comes under pressure, the bank found.
The negative effect on growth may be visible as early as September and is likely to intensify in the last quarter of this year, before recovery starts in 2023. Respondents expect cost increases and inflationary pressures to continue in the short term but said they did not pass on all the cost increases to their pricing.
Business confidence indicators have become significantly bleaker, according to the BNB survey.