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Country Forecast Belgium Product Image

Country Forecast Belgium

  • ID: 2138631
  • May 2013
  • Region: Belgium
  • 45 Pages
  • The Economist Intelligence Unit

A six-party coalition government headed by Elio Di Rupo was finally formed in December 2011, almost 18 months after the general election. Tension between the two linguistic communities will persist and will have an impact on political stability. The hardline separatist New-Flemish Alliance (N-VA) will exploit its position as the main opposition party to boost its popularity further. The coalition's programme of deficit-reduction measures will not be sufficient to eliminate the budget deficit in the forecast period, and government debt will rise above 100% of GDP in 2013-14. Real GDP declined by 0.2% in 2012, and The Economist Intelligence Unit forecasts a slightly harsher contraction in 2013. The economy will then return to average growth of 1.5% per year in 2014-17. Major downside risks stem from the sovereign debt crisis in the euro area. Inflation averaged 2.6% in 2012 and is forecast to fall sharply in 2013, before recovering to 2.3% on average in 2014-17.

According to an opinion poll released in April, the N-VA saw its popular support fall slightly, although from a very high level (about 33.6%). We continue to expect the N-VA to perform well in the 2014 election.

New data from the National Bank of Belgium (the central bank) show that Belgium's budget deficit stood at EUR14.9bn in 2012, equivalent to 3.9% of GDP, compared with 3.5% of GDP in 2011. We continue to forecast an improvement in 2013, but expect the government's target of 2.2% of GDP to be missed.

Country Forecast Belgium

Belgium at a glance: 2013-17
Key changes from last month
Political outlook
Economic policy outlook
Economic forecast

Belgium--highlights: Political outlook

Belgium--highlights: Demographic outlook

Belgium--highlights: Business environment outlook

Belgium--highlights: Economic outlook

Belgium--highlights: Market opportunities

Belgium--highlights: Long-term outlook

Fact sheet

Political outlook: Political forces at a glance

Political outlook: Political stability

Political outlook: Political and institutional effectiveness
Political effectiveness will be affected by devolution of powers

Political outlook: Election watch

Political outlook: Key players to watch
King Albert II
Elio Di Rupo
Bart De Wever

Political outlook: International relations

Demographic assumptions
Net immigration will continue to drive population growth

Business environment outlook: Business environment rankings
The cost of regulation will continue to fall

Business environment outlook: Belgium's business environment at a glance
Policy towards private enterprise and competition
Policy towards foreign investment
Foreign trade and exchange controls
The labour market

Business environment outlook: Macroeconomic environment

Business environment outlook: Policy towards private enterprise and competi
Government modernisation plans have encouraged new business start-ups

Business environment outlook: Policy towards foreign investment
Belgium is one of the most open countries to FDI

Business environment outlook: Foreign trade and exchange controls
Financial integration could face new threats

Business environment outlook: Taxes
Some taxes will rise further

Business environment outlook: Financing
New bank recapitalisation and restructuring may become necessary

Business environment outlook: The labour market
Labour laws are fairly liberal but tax on labour is highest in the OECD
The wage negotiation system will remain rigid

Business environment outlook: Infrastructure
Belgium's infrastructure will remain strong

Economic forecast: Policy trends

Economic forecast: Fiscal policy

Economic forecast: Monetary policy

Economic forecast: International assumptions

Economic forecast: Economic growth

Economic forecast: Sectoral trends
The automotive sector will suffer from the weakness of domestic demand

Economic forecast: Inflation

Economic forecast: Exchange rates

Economic forecast: External sector

Economic forecast: Foreign direct investment in Belgium
Stocks and flows
Origin and distribution

Market opportunities: Market outlook
Growth will be slow, but Belgium will retain a central position within the EU

Market opportunities: Consumer expenditure
E-commerce should expand strongly

Market opportunities: Social indicators and living standards

Long-term outlook: The long-term outlook

Long-term outlook: Methodology for long-term forecasts
Growth projections
Definitions of variables
The independent variables include:
Summary of findings
Productivity growth

Data summary: Global outlook

Data summary: Gross domestic product, current market prices

Data summary: Gross domestic product, at constant prices

Data summary: Gross domestic product by sector of origin

Data summary: Growth and productivity

Data summary: Economic structure, income and market size

Data summary: Fiscal indicators

Data summary: Monetary indicators

Data summary: Employment, wages and prices

Data summary: Current account and terms of trade

Data summary: Foreign direct investment

Data sources and definitions
Global data
Domestic data

Guide to the business rankings model
Outline of the model
Calculating the rankings
Measurement and grading issues

Indicator scores in the business rankings model

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