The BNB lowered its growth forecast for Belgium, forecasting that the economy would shrink by 3.5 percent this year — a far stronger contraction than the 1.9 percent it forecast in February.

It estimated a smaller contraction of 0.2 in 2010.

Quaden said the bank forecast a 16-percent plunge in exports, a 7.1 drop in business investment and a 0.9-percent fall in household spending, and said 140,000 jobs would be lost overall between 2008 and 2010.

"The drop in activity should slow gradually from the second quarter" of this year, he added, however, presenting the bank’s figures on Tuesday at a news conference ahead of their official release.

It said the country’s public deficit — the amount by which its spending exceeds its revenues — would hit 5.5 percent this year and six percent in 2010 as the government spends to prevent the recession dragging into a depression.

European Union rules set a limit of three percent on member countries’ public deficits, but countries are widely exceeding this as they battle the crisis.

"It’s necessary, but it can’t last forever," said Quaden.

AFP/Expatica