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Belgium’s economy contracted less than initially estimated in the second quarter as the biggest retreat of private consumption in more than three years and a depletion of stocks reduced demand for goods made abroad.
Gross domestic product in Belgium fell 0.5 percent from the first quarter, compared with an initial estimate of a 0.6 percent decline on Aug. 1, the National Bank of Belgium said today in a statement. Net trade added 0.4 percentage point to GDP, offsetting the effect of shrinking inventories.
The revision may not change the broader view of the economy as the report also showed that Belgian households cut consumption by the most since the first quarter of 2009 and reduced spending on houses for a seventh consecutive quarter. Forecasts projecting growth for the Belgian economy this year will have to be revised downward, Finance Minister Steven Vanackere told lawmakers in Parliament on Aug. 28.
“The contraction of residential construction confirms that there is a broad-based lack of households’ confidence,” Philippe Ledent, an economist at ING Groep NV in Brussels, said in an e-mailed note. “They clearly prefer to save money as uncertainty remains high.”
The slump in the second quarter, which followed a 0.2 percent expansion in the first quarter, was the biggest in more than three years. Central bank Governor Luc Coene said in an interview with De Tijd and L’Echo last month that the remainder of the year would likely be “more negative than positive,” in a signal that Belgium would slide into a recession for the second time in 3 1/2 years.
Ledent forecast a full-year contraction of 0.2 percent for Belgium, assuming a “slight” recovery in the fourth quarter.
Prime Minister Elio Di Rupo’s six-party government remains committed to cut the budget deficit to 2.8 percent of GDP this year from 3.7 percent in 2011, Vanackere told the lawmakers, adding that tax receipts at the end of July were still in line with a projected 6.9 percent increase for the full year.
Public-sector investment fell 3 percent in the second- quarter, the most in more than two years, and consumption by government bodies declined 0.2 percent from the prior three- month period, the first retreat since at least 1995.
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