Belgium: 2025 Article IV Consultation-Press Release; and Staff Report

The 2025 Article IV Consultation highlights that the Belgian economy was resilient to a series of shocks, but growth has been slowing, and core inflation remains persistent. Labor productivity growth remained sluggish, and labor-cost competitiveness has declined. Successive shocks have increased structural fiscal deficits and public debt. Risks arising from deepening geoeconomic fragmentation and intensification of regional conflicts affecting energy, trade and financial spillovers could worsen the outlook. Sustained fiscal consolidation is needed to support disinflation despite upside risks, rebuild buffers, lower vulnerabilities to change in market sentiments, and address pressures from aging and the green transition. Reforms are needed to increase growth potential through higher labor force participation and productivity, and more efficient resource allocation. Priorities include increasing the income gap between work and nonwork through tax and social benefits reforms, reforming the wage-setting mechanism, and upgrading human capital formation. Sustaining the green transition requires strong commitment by and enhanced coordination among the federal and federated entities.