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Brussels attacks have only 'modest' impact on Belgian economy - ECB's Smets

BRUSSELS (Reuters) - Belgium’s economy is unlikely to have suffered a major setback from the March 22 bombings in Brussels but some sectors may feel the strain, Belgian central bank governor Jan Smets said.

A forensic police prepares outside the terminal at Brussels international airport following bomb attacks in Brussels metro and Belgium's International airport of Zaventem, Belgium, March 23, 2016. REUTERS/Geert Vanden Wijngaert/Pool

On March 22 three suicide bombers killed 32 people in Brussels in attacks that shut down the airport and disrupted business around the Belgian capital.

“The macro impact is modest and the experience from such tragic events in other countries shows that the economic effect is mostly short-lived,” Smets told Reuters in an interview.

The European Commission lowered its economic outlook for Belgium after the attacks, saying it now expected growth of 1.2 percent in 2016, down from its previous forecast of 1.3 percent, due in part to the militant Islamist attacks.

According to the Belgian central bank’s flash estimate, economic growth in the first quarter of 2016 slowed to 0.2 percent from 0.5 percent, below the euro zone average of 0.6 percent.

Smets said growth in the first quarter could have been between 0.03 and 0.1 percentage points higher without the attacks, citing the importance of Brussels’ airport to the Belgian economy.

“You also see some impact in some segments such as hotels, mainly in the Brussels region,” he added.

Smets stressed the importance of the Belgian government balancing its budget in the coming years in order to reduce its public debt level, which stood at 106.5 percent of annual economic output in 2014.

The government aims to have a balanced budget by 2018, though the European Commission still estimates a 2.3 percent structural deficit for 2016, requiring additional cutbacks.

“Sufficient structural measures should be taken in 2016 and 2017 to make sure their structural return is guaranteeing a structural balance, within the horizon of the stability programme,” Smets said.

Reporting by Balasz Koranyi and Robert-Jan Bartunek; Editing by Gareth Jones

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