Iran War Costs Belgian Economy €2.5 Billion

The ongoing war in Iran has already cost the Belgian economy an estimated €2.5 billion in lost economic growth, with businesses reporting severe disruptions to their operations and economists warning that the worst impact is yet to come. The figure, calculated by Voka — the Flemish network of enterprises — represents the reduction in Belgium’s GDP growth from a pre-war forecast of 1.1% to a revised 0.7%, according to Het Laatste Nieuws.

The €2.5 Billion Toll

Bart Van Craeynest, chief economist at Voka, explained that the 0.4 percentage point decline in growth translates directly into lost value for the Belgian economy. “The decline of 0.4 percentage points seems small, but translated into euros for the entire Belgian economy, it amounts to a loss of €2.5 billion,” he told HLN. The figure accounts for reduced consumer spending, higher energy costs, and the broader ripple effects of the conflict.

The war began on 28 February 2026 when the United States and Israel launched coordinated airstrikes against Iran. Since 4 March, Iran has effectively closed the Strait of Hormuz — a chokepoint through which 20% of global oil supplies and significant LNG volumes transit. European oil prices have surged to approximately $109 per barrel, 80% higher than at the start of 2026, while European gas prices have climbed to roughly €51 per MWh.

A Company Paralyzed

For Mechelen-based valve manufacturer Belven, the crisis is not an abstract statistic but a daily reality. The family company, which specializes in industrial valves for gas, chemical, and water pipelines, established a subsidiary in Dubai in 2018 that has become its growth engine, generating approximately €5 million in turnover serving the entire Gulf region.

Since the Strait of Hormuz blockade, that subsidiary has been “completely paralyzed,” according to co-owner Philippe Wauters. Goods are stuck at sea, with some ships forced to return to Europe with cargo still aboard because they cannot unload. “Deliveries are happening almost at a loss, purely to avoid losing Arab customers,” Wauters said.

The uncertainty is also freezing investment at home. Wauters reported that a major Belgian hospital construction project for which Belven supplies valves has been pushed back a full year to the end of 2027. “Uncertainty is the greatest enemy of the economy,” he said.

Belgium’s Structural Vulnerability

Belgium is disproportionately vulnerable to the energy price shock. The country’s economy is 40% more energy-intensive than the EU average, with a large chemical and heavy industrial sector that consumes vast amounts of energy. The chemical sector has already contracted by approximately 16% since 2019.

Compounding this is Belgium’s unique system of automatic wage indexation. When inflation rises — as it has from a pre-war forecast of approximately 2% to a projected 3.5–4.5% — wages automatically increase. This protects consumer purchasing power but creates a severe competitive disadvantage for Belgian businesses during energy price shocks.

Patrick Slaets, an economic expert at Agoria, the technology industry federation, warned of permanent damage. “Through the automatic wage indexation, our labor costs rise faster than elsewhere. When inflation exceeds 3.5%, Belgian industry suffers permanent damage,” he said. “Via restructuring and closures, production capacity is lost that never returns. We recognize this pattern in every oil crisis since 1974: Belgian industry accumulates more scar tissue than its European trading partners.”

The Worst Is Yet to Come

Van Craeynest cautioned that the €2.5 billion figure assumes a gradual normalization of the situation in the coming months. “If the conflict drags on, the cost will only increase,” he warned.

The most significant impact, however, has yet to materialize. “The biggest blow for most companies — the higher labor cost due to automatic wage indexation — will largely come next year,” Van Craeynest explained. With inflation running at approximately 4% instead of the pre-war 2%, businesses face an extra 2% increase in labor costs starting in 2027.

Government Budget Under Strain

The economic slowdown is also straining Belgium’s public finances. Lower growth is expected to reduce tax revenues by approximately €2.5 billion, while higher interest rates could add €3 billion to annual debt servicing costs. Belgium already carried a budget deficit of €33 billion before the war, limiting the government’s capacity to implement support measures for affected businesses.

No Recession — Yet

Despite the grim figures, Van Craeynest stopped short of declaring a recession. “A growth of 0.7% is low, but we are far from a recession with negative growth figures,” he said. “We have survived much harder economic shocks in the past. The oil crisis of the 1970s had a much greater impact. Today we are fortunately more energy-efficient and less dependent on oil. But the longer this continues, the greater the damage will be.”

What to Watch For

The trajectory of the Belgian economy now depends heavily on the duration of the Iran conflict. If the Strait of Hormuz remains blocked and energy prices stay elevated, the €2.5 billion figure will rise. The automatic wage indexation effect arriving in 2027 threatens to inflict lasting structural damage on Belgian industry, particularly in energy-intensive sectors. Whether the Belgian government or the EU can implement targeted relief measures remains an open question as fiscal constraints tighten.