Belgian September Business Confidence Declines to Five-Year Low

By Jurjen van de Pol

Sept. 23 (Bloomberg) -- Belgian business confidence dropped to a five-year low in September, led by weakening orders in the manufacturing industry.

The confidence index for Belgium, the sixth-largest economy among the 15 nations that use the euro, fell to minus 14.4 this month from minus 5.9 in August, the Brussels-based National Bank of Belgium said today in an e-mailed statement. The September reading is the lowest since July 2003 and below the minus 6.9 expected by economists, according to the median of 21 forecasts in a Bloomberg News survey.

The euro-area economy is showing few signs of recovery after contracting in the second quarter for the first time since the introduction of the single currency almost a decade ago, as exports, investment and consumer spending declined. Belgium's Federal Planning Bureau on Sept. 12 projected Belgian economic growth would stagnate in the current quarter, citing a slowdown in exports and domestic demand.

``Export growth has fallen substantially in recent months and inventories are expanding, weighing on industry sentiment,'' said Peter Vanden Houte, chief economist at ING Belgium in Brussels. ``Seventy percent of Belgian exports go to other European Union countries, whose economies are cooling rapidly.''

The European Commission this month cut its growth forecasts for the region and projects a recession in Germany, Europe's largest economy and one of Belgium's biggest trading partners. Expansion in Belgium is expected to slow to 1.2 percent next year from 1.6 percent this year, according to the Brussels-based planning bureau.

`Deteriorated Considerably'

`` The decline was strongest in the manufacturing industry,'' the Belgian central bank said, adding that ``domestic and export demand deteriorated considerably.'' The manufacturing-sentiment sub-index fell to minus 15.8 from minus 5.6 in August; the September reading is the lowest since 2005.

The fallout from the U.S. financial-market crisis will damp economic growth in Europe into next year, European Central Bank Governing Council member Ewald Nowotny said last week. While monetary union brought a ``huge'' increase in stability for its members in times of market turmoil, ``of course we can't isolate ourselves'' from developments in the U.S., he said.

Business sentiment in Germany probably declined for a fourth month in September as the credit-market squeeze intensified, according to the median estimate of 41 economists in a Bloomberg News survey. The Munich-based Ifo institute's business climate index, which is based on a survey of 7,000 executives, will be released tomorrow.

Kuurne, Belgium-based Barco NV, the world's second-largest maker of digital cinema projectors, on Sept. 12 said it plans to sell some unprofitable businesses as customers cut back on orders for light-emitting-diode walls and projectors. Belgian supermarket operator Delhaize Group last month said its second- quarter revenue fell 7.5 percent and reiterated its July prediction that operating profit may not rise at all this year.

To contact the reporter on this story: Jurjen van de Pol in Amsterdam jvandepol@bloomberg.net