Recession strikes in Belgium

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In 2009 the economy is expected to shrink by 0.2 percent.

Belgium will not be spared a recession. In 2009 the economy is expected to shrink by 0.2 percent. The announcement came from the governor of the National Bank of Belgium, Guy Quaden, when he presented the half-yearly revision of the economic prognosis for Belgium.

According to the definition of a recession as 'negative growth for two consecutive quarters' Belgium will officially be in recession from the first quarter of 2009.

The economy showed negative growth in the last quarter of the year; the prognosis for 2009 is also for a negative growth. After that the National Bank expects a slight recovery.

The economy is expected to slacken by 0.2 percent next year. "This is comparable to the last recession in 1993," says Guy Quaden. Six months ago the prognosis for the Belgian economy was for a growth of 1.5 percent. By the end of 2008 the growth is estimated to be about 1.4 percent, but with negative growth in the last quarter.

The recession will have consequences for job creation and for existing jobs as well. While this past year 65,000 jobs were created, by December of next year the National Bank predicts that some 8,000 jobs fewer will be created. Unemployment is expected to rise to above 7 percent again.

The budget deficit is expected to rise to about 2 percent of the Gross Domestic Product. This is a symbolic level - and one which, according to Guy Quaden, "Is better not to exceed."


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