A sharp reversal of fortune is expected for Belgium’s economy and exchange traded funds (ETFs) as trade and exports diminish, but there is a sliver of good news.

The good news is that inflation forecasts dropped to 0.5% in 2009, down from 4.5% last year, but it’s really only because of the steep drop in oil prices. And that’s where the good news ends. Like most of the world, gloom is on tap in economic forecasts for Belgium.

The Belgian central bank slashed its national economic forecast from a 0.2% decline to a contraction of 1.9% for 2009, according to Forbes. Governor Guy Quaden has acknowledged the lower GDP estimates is a sign of a “serious recession.”

The Belgian economy is one of the world’s most trade -ensitive, and it makes up less than 4% of the Eurozone.

This recession is especially noteworthy because of its speed of deterioration, according to AFP. Exports dropped by 1% and potential investors may be deterred from the kingdom’s companies. Consumer spending may also drop. It is estimated that some 57,000 jobs could be lost this year.

• iShares Belgium Investable Market Index (EWK): down 5.2% in the last month

Tags: Belgium, Europe, EWK, Global ETFs