"Unfortunately we are talking at the moment about a contraction of 1.9 percent of gross domestic product (GDP) in 2009. It's not a depression, but it's a serious recession," he said.

Quaden had said in December the economy would shrink by at least 0.2 percent in 2009.

The drastic downward revision was due in large part to a decline in GDP of 1.3 percent in the final quarter of last year - a "real catastrophe" - and to the global downturn, Quaden said.

"What makes this recession stand out, compared to those of the eighties and nineties, is the speed of the deterioration," the governor of the National Bank of Belgium said Monday, in remarks to reporters that were kept under media embargo until Wednesday.

Belgium is expected to see its annual exports drop by one percent, which could deter investors from the kingdom's companies. Consumer spending is also likely to drop.

On the employment front, notably in industry, "the prospects are not good," Quaden acknowledged, forecasting that some 57,000 jobs could be lost this year.

All in all the budget deficit could increase to 3.3 percent of GDP with public debt rising for the first time in 15 years.

Inflation however was forecast to drop to 0.5 percent in 2009, compared to 4.5 percent last year.

AFP/Expatica