Two full months into the nationwide lockdown, economists at the three main banks in Belgium are now predicting the country will not see any sign of economic recovery until 2023, De Tijd reports.
About a month ago, the paper quizzed top economists at KBC, ING Belgium and BNP Paribas Fortis regarding their forecasts for how the coronavirus crisis would affect the economy.
Then, the banks were predicting negative GDP growth of up to 9.5% for 2020, rising to 12.3% in 2021. At the time, the general view was that the economy would take a deep dive, but recover quickly, especially as lockdown measures were rapidly removed.
Now, however, the outlook is nowhere near as optimistic.
At BNP Paribas Fortis, the bank this week issued a forecast that saw the economy shrink by 11.1% in 2020, recovering only 4.3% in 2021.
KBC revised its prognosis to 9.5% negative growth this year, with ING the rosiest of all at ‘only’ 6.8%. Both, however, agreed that 2021 would only see a weak and partial recovery from the effects of 2020.
“We expect economic activity to return to the level of late 2019 only at the end of 2023,” said ING economist Philippe Ledent. “Sixteen quarters to reach the pre-pandemic level is not that much if you consider the magnitude of the shock. After the financial crisis, which was much less severe, it took nine quarters for the Belgian economy to fully recover.”
Over at KBC in Leuven, chief economist Jan Van Hove said he expects economic activity to be 4.4% lower at the end of 2021 than at the end of 2019.
“We will not see a full recovery in the next year and a half. Export orders are falling, we expect investment to weaken and unemployment to rise. There may not be a complete recovery of economic activity until 2023.”
Koen De Leus, chief economist of BNP Paribas Fortis, raised the spectre of a flare-up of the pandemic.
“That will cause fear and depress consumption. The older and vulnerable section of the population will limit their expenditure. We will reach the level of the end of 2019 at the earliest in 2023. A complete recovery of the economy requires a vaccine.”
Scientists, as opposed to some politicians, don’t expect that to appear until at least 2021.