Belgium’s planning bureau cut its forecast for 2012 economic growth as government austerity measures hurt consumer spending, complicating Prime Minister Elio Di Rupo’s task of meeting his deficit goal.
Growth in the Belgian economy shouldn’t exceed 0.1 percent this year, the Brussels-based agency said today in an e-mailed statement, compared with its September forecast of 1.6 percent.
The slower growth means Di Rupo’s government needs to find as much as 2.5 billion euros ($3.3 billion) in spending cuts or new revenue in order to meet its budget-deficit target of 2.8 percent of gross domestic product, L’Echo and De Tijd reported today. Belgium entered a recession last year, with the economy shrinking 0.2 percent in the fourth quarter and 0.1 percent in the third.
“In 2012, quarterly growth in the Belgian economy should remain very modest given the very gradual recovery of the European economy and fiscal consolidation measures decided by the federal government,” the planning bureau said. “Economic activity should stabilize in the first quarter, and then show weak export-led growth” over the rest of the year.
Belgian consumer confidence dropped to the lowest in two and a half years last month as consumers faced inflation accelerating to 3.7 percent boosted by higher gasoline prices and a record price of diesel.