Belgian economy falls back to 2009 level
Figures from the National Bank of Belgium show that the corona crisis has given the Belgian economy a sledgehammer blow. Gross domestic product (GDP) adjusted for inflation fell by 12,2% in the second quarter. This has never happened in recent decades, writes the newspaper De Tijd.
Less than expected
However, the contraction is less than expected. Most large banks had predicted a decline between 15 and 18%. All major sectors were hit hard. The added value fell by 13% in manufacturing, by 13,3% in construction, and by 11,8 in services.
The government is hit hardest. The Monitoring Committee, a group of high-level officials, predicts that the budget deficit will triple to 12,3% of GDP in 2020, the highest level since 1983. Public debts will rise from 99 to 122% of GDP, the highest level since 1997.
Recovery in 2023
The number of jobs fell by 14 800 in the first quarter. The National Bank warns an increase in the number of bankruptcies. The recent increase in the number of infections, and the recent reintroduction of restrictive measures also raise questions about the economic recovery.
Principal economists warn that, according to Google data, mobility in Belgium has dropped more in recent weeks than in other European countries. This may indicate that the resurgence of the pandemic is weighing on consumption. Most banks expect economic activity to reach pre-corona crisis levels only in 2023.
German economy takes a historic blow
In Germany, too, the corona crisis has dealt an unprecedented blow to the economy. In the period April-June, the European locomotive shrank 10,1%. This is shown by figures from the German statistical office, Destatis.
It’s the hardest blow to the German economy since the country began to keep up with quarterly figures in 1970. More than half a million people lost their job since March. The unemployment rate reached 6,4% in July, the highest level in almost five years.
Long road to recovery
Carsten Brzeski, ING Germany’s chief economist, thinks ‘the worst quarter ever’ could be followed by ‘the best quarter ever’, due to the fiscal stimulus measures by the government of Chancellor Angela Merkel and a VAT reduction in particular in the services and construction sectors.
However, Brzeski fears that the road to full economic recovery will be a long one, given that supply chains around the world are severely disrupted, and that the many important trading partners are also facing a major economic downturn.