NBB Forecasts: Inflation Spike, Slowing Growth Ahead for Belgium
The National Bank of Belgium (NBB) has released its June 2026 economic projections, painting a challenging near-term picture for Belgian households and businesses. The forecasts — covering inflation, growth, employment, and public finances — show a temporary but sharp economic shock driven primarily by the war in Iran, with inflation spiking to 3.4% this year and GDP growth halving to just 0.6%, according to the NBB’s press release.
The Iran War Shock
The June 2026 projections are the first from the NBB to fully incorporate the economic impact of the conflict in Iran, which began in spring 2026. The war triggered a spike in oil prices, which the central bank describes as a “temporary shock” to the Belgian economy. According to the NBB, oil prices are expected to normalize relatively quickly based on current market expectations, though uncertainty around energy price assumptions remains “particularly high.”
The full NBB report details how the energy price surge is the primary driver of the inflation spike, pushing the harmonized index of consumer prices (HICP) to an average of 3.4% in 2026, up from 3.0% in 2025. The health index — used for automatic wage indexation in Belgium — is projected at 3.3% for the year.
Four Key Predictions for Households
As De Morgen reported, the NBB’s projections translate into four direct impacts on Belgian wallets:
1. Rising inflation. The HICP inflation rate will peak at 3.4% in 2026 before moderating to 2.3% in 2027 and 2.0% in 2028. The underlying inflation measure — which excludes volatile energy and food prices — is projected at 3.2% for 2026, indicating broad-based price pressures.
2. Declining purchasing power. Real disposable household income is projected to fall by 0.5% in 2026 — a sharp reversal from the 1.8% growth recorded in 2025. This decline stems from a combination of higher inflation, the partial cap on automatic wage indexation (the “centenindex” reform taking effect from June 2026), and restrictions on unemployment benefits. The European Commission’s Spring 2026 forecast similarly projects weakening private consumption as purchasing power erodes.
3. Economic slowdown. GDP growth will fall to 0.6% in 2026, down from 1.0% in 2025, with growth in the second quarter of 2026 dropping to near zero before recovering. The NBB projects a rebound to 1.1% in 2027 and 1.3% in 2028, though growth remains below the long-term average of the 2010s.
4. Worsening public finances. Belgium’s budget deficit is projected to widen from 5.2% of GDP in 2025 to 5.7% of GDP by 2028. Government debt is expected to rise from 107.9% of GDP to 114.8% over the same period, driven by rising interest costs, aging-related expenditures, increased defense spending, and lower tax revenues from the economic slowdown.
Labor Market and Employment
Despite the economic headwinds, the NBB projects approximately 90,000 net new jobs will be created between 2026 and 2028. However, the unemployment rate is expected to rise from 6.2% in 2025 to 6.6% in 2026-2027, before edging down to 6.4% in 2028. The increase reflects the impact of time-limited unemployment benefits — roughly 100,000 unemployed individuals lost their benefits between January and June 2026, with another 70,000 expected to follow by mid-2027.
Households Dipping into Savings
To maintain consumption levels despite declining incomes, Belgian households are expected to reduce their savings rate from 12.8% in 2025 to 11.8% in 2026. The NBB notes that households typically use their savings as a buffer during periods of volatile income. Consumption is projected to continue growing modestly in 2026 despite the purchasing power decline, before strengthening in 2027 and 2028 as incomes recover.
Outlook and Risks
The NBB expects a recovery to take hold from 2027 as the energy price shock fades. Inflation should moderate to 2.0% by 2028, purchasing power is projected to rebound (+1.3% in 2027, +1.8% in 2028), and GDP growth should return toward potential. However, significant risks remain. The uncertainty around energy price assumptions is high, and alternative scenarios could materialize if the Iran conflict escalates or oil prices do not normalize as expected.
On the fiscal front, the deteriorating deficit trajectory suggests that additional consolidation measures — potentially including tax increases or spending cuts — may be needed to stabilize Belgium’s public debt, which at nearly 115% of GDP by 2028 would be among the highest in the eurozone. The “centenindex” reform and unemployment benefit restrictions are already factored into the projections, but these measures are not sufficient to reverse the fiscal deterioration.
As De Morgen’s Pieter Gordts summarized: “Additional taxes will likely be needed, our purchasing power is declining, and inflation peaks this year. The National Bank’s short-term predictions are not really rosy.”