National Bank warns against increasing government deficit to 5.6 percent GDP in 2027
© Belga
Governor of the National Bank Pierre Wunsch had no pleasant news for the governments in our country during the new spring projections. Despite the saving measures, an economic growth of around 1 percent per year and a falling inflation and the creation of 100,000 extra jobs in the coming years, the government deficit would continue to increase to 5.6 percent of the gross domestic product by 2027.
Source: Belga
Today at 13:13
The debt ratio would also rise further, up to 112.7 percent of GDP by 2027. « The efforts do not make enough. There will be additional measures, » said the governor.
In the forecasts, the limitation of the unemployment benefit over time or the pension reform was partly taken into account. But the problem is that some of those savings will only be visible in the medium term. In addition, a part is also canceled by higher defense expenditure.
Economically, the National Bank had less ominous news. For this and the next two years, an economic growth of approximately 1 percent per year is taken into account. That is slightly less than in the previous prognosis, especially as a result of the government savings and the trade war with the US. On the other hand, a positive effect is expected from lower energy prices and extra investments in defense and infrastructure.
The National Bank also expects the creation of 100,000 jobs by 2027. The limitation of unemployment benefits would yield 30,000 jobs, but that positive effect is partly canceled by the uncertain international situation and weaker activity growth (-20,000 jobs).
Inflation has already fallen strongly towards the peak in 2022 and the National Bank also expects a further decrease, especially due to lower energy prices. For 2025 an inflation of 2.6 percent is expected, next year only 1.3 percent.
