Tuesday, 15 September 2026
Belgium’s economy struggled to generate meaningful growth during the first half of 2026, with modest expansion at the beginning of the year followed by stagnation in the second quarter. Services and a relatively stable labour market provided support, while industry, construction, higher inflation and pressure on public finances created a more difficult economic backdrop. Economic output increased by 0.2% during the first quarter compared with the final three months of 2025, before GDP remained unchanged from Q1 during the second quarter. Compared with the corresponding period of 2025, economic output was 0.8% higher in the first quarter and 0.5% higher in the second.
Performance differed considerably between the main sectors of the economy. Industrial activity declined by 0.8% during Q2 compared with the previous quarter, while construction contracted by 0.5%. Services performed better, expanding by 0.2% and helping to prevent the wider economy from slipping into contraction.
Inflation became a more prominent economic issue during the spring. On the EU-comparable measure, annual price growth stood at 1.4% in both January and February before increasing to 2.2% in March. Inflation then accelerated to 4.2% in April and remained elevated at 4.0% in May before easing to 3.3% in June. Energy prices were responsible for an important part of this increase. By June, energy costs were 12.8% higher than a year earlier, although this represented an improvement from the 18.2% annual increase recorded in April. Inflation across services remained comparatively persistent at 3.8% in June.
Price pressures outside the most volatile categories were less severe. Inflation excluding energy and unprocessed food declined from 3.0% in April to 2.7% by June. The figures suggest that the sharp movement in headline inflation during the spring was strongly influenced by energy rather than an equivalent increase across the wider range of household expenditure.
Belgium’s labour market remained comparatively resilient despite the weak growth environment. The employment rate among people aged between 20 and 64 stood at 72.8% during the second quarter, unchanged from Q1, with approximately 4.94 million people within this age group employed. Unemployment declined slightly between the two quarters, moving from 6.3% in Q1 to 6.1% in Q2.
However, the national figures continue to conceal substantial regional differences. The employment rate reached 77.3% in Flanders, compared with 67.6% in Wallonia and 64.7% in the Brussels-Capital Region. Reducing this regional employment gap remains an important economic challenge, particularly as the federal government aims to increase Belgium’s overall employment rate to 80% by 2029. Achieving that objective would require a substantial increase in labour-market participation from current levels.
Corporate failures provided a less positive indicator during the first six months. Several sectors recorded unusually high numbers of bankruptcies, demonstrating that stable employment and modest economic growth have not prevented financial difficulties from affecting parts of the business sector. Transportation and storage recorded 480 bankruptcies during the first half, approximately 18% above the previous H1 record established in 2025. There were also 232 bankruptcies among information and communication companies and 491 among businesses involved in professional, scientific and technical activities.
Belgium recorded 1,184 company bankruptcies during June alone. These were associated with 3,124 job losses, representing the highest number of bankruptcy-related employment losses recorded during a June since 2016.
Public finances remain one of the country’s more significant economic challenges. Belgium entered 2026 with government debt already exceeding annual economic output, while the budget continued to operate with a substantial deficit. Demographic pressures, defence requirements and financing costs are expected to keep government expenditure under pressure. European Commission assessments have placed Belgium’s 2026 budget deficit at around 5% of GDP, while government debt is expected to remain close to 110% of GDP. The precise figures vary between forecast rounds, but the broader direction remains clear: Belgium has limited fiscal room while simultaneously attempting to strengthen economic growth.
The National Bank of Belgium expects GDP to expand by approximately 0.6% across 2026, following growth of around 1.0% in 2025, while inflation is expected to average approximately 3.4% this year. The outlook beyond 2026 is for a gradual rather than rapid improvement. The central bank expects economic growth to strengthen over the following two years, reaching approximately 1.3% by 2028, while inflation is expected to move back towards 2%.
For Belgium’s commercial property industry, the economic picture remains uneven. Continued growth in services and relatively stable employment provide some support for occupier markets, while weaker industrial and construction activity creates a more cautious environment for sectors connected to manufacturing and development. Regional differences are equally important for property investors and developers. The substantial variation in employment rates between Flanders, Wallonia and Brussels illustrates why national economic indicators cannot fully describe conditions in individual Belgian markets.
Belgium entered the second half of 2026 with the economy still expanding compared with a year earlier but showing almost no momentum from one quarter to the next. Services and employment have helped maintain stability, while inflation, weak industrial activity, elevated business failures and difficult public finances continue to constrain the recovery. The remainder of the year will show whether Belgium can move beyond this period of stagnation, with stronger household spending and renewed corporate investment needed for economic growth to accelerate materially.
Source: CIJ.World Research & Analysis Team
