BRUSSELS, Jan 29 (Reuters) - Belgium's economy will shrink by 1.7 percent this year, an official government agency said on Thursday, reflecting the financial crisis and a sharp slowdown among the country's trading partners.
The Federal Planning Bureau (FPB), whose estimates the federal government uses to draw up budgets, had forecast 1.2 percent growth this year in its previous forecast last September.
The agency said it believed Belgium would register four consecutive quarters of negative growth from the fourth quarter of last year.
Exports would fall by 4.6 percent in 2009 after a 2.2 percent increase in 2008. Domestic demand would decline by 0.3 percent.
Unemployment would rise to 8.2 percent from 7.1 percent last year.
However, the agency said Belgium would fare slightly better than the euro zone as a whole because the latter had registered contraction from the second quarter of 2008. Belgium's economy had grown in the first three quarters of the year.
The FPB forecast inflation of 1 percent this year from 4.5 percent last year. It had previously forecast a figure of 2.0 percent. (Reporting by Philip Blenkinsop; editing by Stephen Nisbet)