After a modest first quarter, when the economy grew by 0.2% quarter-on-quarter, Belgian GDP stagnated in the second quarter. On the demand side, household consumption once again proved resilient, rising by 0.4% despite the first wave of higher energy prices. By contrast, business investment fell by 0.7%, while public investment dropped by 8.0%. On the supply side, industry again underperformed, with activity contracting by 0.6% from the previous quarter. In practical terms, Belgian industrial added value in 2026 remains below its level at the end of 2019.
At the end of June, there were grounds to hope that the easing in energy prices would prove lasting, paving the way for activity and inflation to normalise. That optimism helped lift both consumer and business confidence over the summer. Based on July and August data, the National Bank of Belgium estimated that growth could then rebound by 0.3% in the third quarter.
We are less optimistic, however. The escalation in geopolitical tensions since August has dashed hopes of a swift end to the conflict. In September, diesel prices moved above their early-April peak. European natural gas prices, meanwhile, are now more than twice their level at the start of the year, adding to household energy bills. Combined with the first effects of fiscal tightening, it is hardly surprising that consumer confidence fell back in September to its May low.
Business confidence improved in September, but the headline indicator owes much to manufacturing. Confidence in the sector continued to recover, with the index rising from -17.8 in August to -12.2 in September, close to its level before the conflict in the Middle East. Similar, and somewhat surprising, resilience can be seen elsewhere in Europe. Yet sentiment weakened markedly in every other sector, with the services’ indicator falling to its lowest level since October 2023. The bottom line is that Belgium’s economy is likely to end the year on a subdued note. We do not expect a recession, but growth is set to remain very weak.