Covering the months of April, May and June, the report gives a clear picture of the economic impact of the coronavirus pandemic. The last BCM published on March 9 had very little time to take account of the effects of the Covid-19 epidemic in Belgium. Then, the forecast was for growth of 0.2% in the first quarter.
In the end, growth in that quarter turned out to be negative 3.6%, after the lockdown was introduced from March 13 for the horeca sector and large stores, and from March 16 for all non-essential retail.
The quarterly BCM was first published in September last year, with the intention of giving a picture of economic growth in the current quarter, up to eight weeks before the first official figures are presented by the National Accounts Institution (NAI). The Bank refers to its almost real-time publication as “nowcasting”.
Prior to September 2019, the BCM was an internal document within the NBB. Looking back over its forecasts since 2015, the NBB says they can be considered to be “fairly accurate”.
The importance of the BCM approach is that it combines raw figures with expert analysis. “It is a deliberate choice to not only hand the reader the model-based result of the nowcasts, but also an insight into the wider business cycle analysis surrounding it,” the bank says.
“Moreover, an assessment of the last 18 editions shows that this expert judgement also offers an added value to the forecast.”
Two main factors affected the economy in the second quarter – the sheer impossibility of spending money in most shops and in bars and restaurants; and a growing lack of confidence over the economy as a whole, both business and the general public.
According to the prognostic models used by the NBB, a forecast could have been made of positive growth of 2-2.3%. But the expert opinion was that those mechanical prognoses were “not reliable in these exceptional circumstances, [as they] overestimate growth significantly”.
Whether that informed estimate turns out to be accurate will become clear later. The next BCM will be published in early September, and will essentially be a picture of the effects on the economy of the deconfinement now under way.