The CBC/KBC bank insurance group has revised its 2018 economic growth forecast for Belgium from the original 1.9% to 1.6%, citing the risk of heightened trade conflicts, political uncertainty and higher oil prices. The group’s forecast is less optimistic than others since the average prediction was 1.8%. The CBC/KBC economists expect “a serious slowdown” in the economy this year, says the group’s chief economist, Jan Van Hove.
The study points to a generally dimmer mood and political uncertainty in the world and in Europe, for example, “the results of the elections in Italy”. This defeatist feeling is also noticeable in the world of business. A relative optimism still prevails, “but business people say they feel the downturn coming”, said Jan Van Hove.
The risk of an escalation of global trade conflicts can also affect Belgium’s economy, as can the weaker dollar and skyrocketing oil prices. Increases in the price of black gold usually causes trade balances to deteriorate. Belgium is particularly at risk because of its important chemical sector and its relatively high energy intensity, the bank insurer explained.
However, certain elements remain positive for Belgium’s economy: real economic growth is still higher than potential growth since a sustained increase in domestic consumption and investments can be observed.
CBC/KBC has also revised its original 2019 growth forecast downward – from 1.7% to 1.5%.