Bloomberg News

Belgian GDP Contracts at Slower Pace Than First Estimated

May 02, 2012

Belgium’s economy resumed expansion in the first quarter even as the government cuts spending to rein in the budget deficit.

Gross domestic product in Belgium, the sixth-largest economy in the euro area, grew 0.3 percent from the fourth quarter, when it declined 0.1 percent, the National Bank of Belgium in Brussels said today in a statement. The economy expanded 0.5 percent from the year-earlier period after growth of 1.2 percent in the last quarter of 2011.

The nation’s economy may struggle to gather momentum as Prime Minister Elio Di Rupo’s administration seeks 2 billion euros ($2.6 billion) in additional spending cuts or tax increases to meet its target for a deficit of 2.8 percent of GDP in 2012. The central bank forecasts the economy will contract 0.1 percent this year.

“This number has to be considered as good news for the euro zone, as it demonstrate that core countries are still able to benefit from positive growth even during the age of austerity,” said Philippe Ledent, an economist at ING Groep NV in Brussels. Still “negative growth during the second quarter cannot be fully excluded.”

Unemployment across the euro region rose to a 15-year high in March and the manufacturing industry contracted for a ninth straight month in April, data showed today. Belgian business confidence dropped unexpectedly last month, led by deteriorating sentiment in manufacturing and services, the central bank said on April 24.

‘Highly Uncertain’

Mobistar SA (MOBB), Belgium’s second-biggest mobile-phone company, last week reported a 28 percent drop in first-quarter earnings and said full-year profit will decline more than most analysts estimated. Picanol NV, a Belgian maker of weaving machines, last month forecast a drop in first-half revenue and said the outlook for the second half “remains highly uncertain.”

The central bank revised its GDP figure for the third quarter to show no growth, compared with a 0.1 percent contraction reported earlier. For all of last year, the bank said Belgium’s economy expanded 2 percent, compared with the 1.9 percent growth estimated earlier.

To contact the reporter on this story: Jones Hayden in Brussels at jhayden1@bloomberg.net

To contact the editor responsible for this story: Jerrold Colten at jcolten@bloomberg.net


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