BRUSSELS (Reuters) - Belgium’s economy is set for three years of lost growth from the COVID-19 pandemic as the 2021-2022 recovery fails to make up for a 9% decline forecast for this year, the country’s central bank said on Monday.
Belgium’s central bank said gross domestic product in the euro zone’s sixth-largest economy would decline 9.0% this year, followed by growth of 6.4% in 2021 and 2.3% in 2022.
Gross domestic product (GDP) at the end of 2022 would be some 4% lower than assumed before the coronavirus struck.
“You need to go back to the World War or the 1930s to see a decline of this nature... What is clear is that it will not be a V-shaped recovery,” bank governor Pierre Wunsch told a video news conference.
The bank said that there was likely to be some permanent impact from the crisis - bankruptcies, a shift from temporary to regular unemployment and trade not resuming as before.
Belgian households could rapidly increase consumption as restrictions eased, such as Monday’s reopening of bars and restaurants, with state support preventing a decline of income and limiting unemployment.
The bank put the cost of the lockdown from mid-March at 47 billion euros ($53 billion) in terms of lost income.
Wunsch said the reaction to the crisis in terms of economic support meant the economic downturn would not be as in the 1930s. The stimulus was ambitious, but it also needed to be temporary and focused.
Belgium’s debt, already at around 100% of GDP, was set to rise to around 120% because of increased public spending and lower growth.
“We are now in the easy part of the crisis, the spending. The difficult part will come when we get to the point when it’s time to save.”
Reporting by Philip Blenkinsop; Editing by Hugh Lawson