DEXB Dexia

By Alessandro Torello

Belgium's economy will shrink 0.2% this year and will be only flat in 2013, the country's central bank said Monday.

"Gross Domestic Product is predicted to continue contracting slightly in the final quarter of 2012 and the first quarter of 2013, following negative or zero growth in the preceding two quarters," the Belgian National Bank said in a press release accompanying its report on the country's economy. "However, from the second quarter of 2013 the economy should gradually begin to pick up, bolstered initially by the external demand," it said.

The central bank expects the country to meet its 2.8% deficit goal for this year, but the government will have to decide on further measures to respect its target of a deficit of 2.15% of GDP next year, as a weaker economy will take its toll, the governor of the bank said during a press conference. "There is already a difference" from that target, Central Bank Governor Luc Coene said.

Write to Alessandro Torello at alessandro.torello@dowjones.com