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Economic Overview

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Belgium benefits from a strategic geographical position: situated between the UK, Germany and France, Europe’s three main economies. Despite experiencing a historic recession due to the COVID-19 pandemic, the Belgian economy has recovered much faster than expected and has already reached its pre-pandemic level: according to the latest estimates by the IMF, GDP grew 5.6% in 2021 thanks to an uptick in private consumption and in investments. The IMF expects real GDP to grow by 3.1% and 1.8% in 2022 and 2023, respectively, also due to a negative contribution of net exports.

The measure taken to mitigate the impact of the COVID-19 crisis (including health measures, various regional schemes to compensate businesses for reduced turnover, and temporary unemployment schemes) led to a budget deficit of around 6.3% in 2021. Despite the expected phasing-out of most pandemic-related measures, public expenditure is projected to decrease only slightly in nominal terms this year and to increase again in 2023. Accordingly, the budget deficit should decrease to 4.4% in 2022, before picking up to 4.6% the following year (IMF). The debt-to-GDP ratio stood at around 113.4% in 2021, and it is expected to decline to 112.9% this year before it increases again to 114% in 2023 due to a persistent government deficit. Higher energy prices and an unprecedented labour cost growth (due to the indexation of wages) led to a headline inflation of 2.4% in 2021. According to the National Bank of Belgium, headline inflation should peak in the first months of 2022 (at close to 8%) and core inflation should peak by mid-2022; but both indexes should fall back to levels that are clearly below 2% by the end of the projection period.

Unemployment increased only slightly in 2021 thanks to the policy measures taken to shelter jobs, as it stood at 6.3% (IMF). The rate is expected to decrease gradually to 6.1% and 5.9% this year and the next, in line with economic growth. The low labour market participation rate remains a major challenge for Belgium in the coming years, with unemployment disproportionately affecting young people, non-European immigrants and the region of Wallonia as a whole.

 
Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 533.31514.92581.85619.16650.84
GDP (Constant Prices, Annual % Change) 1.8-6.35.63.11.8
GDP per Capita (USD) 46,55544,68850,41353,45255,939
General Government Balance (in % of GDP) -2.2-7.4e-6.3-4.4-4.6
General Government Gross Debt (in % of GDP) 98.1114.1113.4112.9114.0
Inflation Rate (%) 1.20.42.42.21.9
Unemployment Rate (% of the Labour Force) 5.45.6e6.36.15.9
Current Account (billions USD) 1.86-0.78-0.08-3.82-4.12
Current Account (in % of GDP) 0.3-0.2-0.0-0.6-0.6

Source: IMF – World Economic Outlook Database , October 2021

Note: (e) Estimated Data

Country Risk

See the country risk analysis provided by La Coface.

 

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Main Sectors of Industry

Belgium’s strategic geographical position, its highly developed transport infrastructure, its wide range of services and its influence in industry and high tech have contributed to the development of its economy. Agriculture contributes a small amount of the national GDP (0.6%) and employs 1% of the active population (World Bank, latest data available). The main crops are sugar beets, vegetables and fruits, meat and milk. According to data by StatBel, organic farming accounts for 7.2 % of the utilized agricultural area, of which 90.8% is located in Wallonia.

The industrial sector accounts for 19.5% of the GDP, employing 21% of the workforce. There are significant discrepancies between the three Belgian regions: while Flanders has succeeded in developing the second largest petrochemical industry in the world, Wallonia is in the middle of restructuring, following the closure of its collieries and a large number of steel plants. Brussels distinguishes itself in the areas of telecommunications, software development and the pharmaceutical and automobile industries. Despite that its contribution to GDP has been decreasing in recent years, the manufacturing industry is still key to the Belgian economy (12.4%).

The Belgian economy is largely oriented towards services. In fact, the tertiary sector accounts for 69.6% of the GDP and employs 78% of the active population. Brussels, the hub of several European institutions, numerous diplomatic representations and different interest groups, has essentially based its economy on services. Tourism is also an important sector of the economy.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 0.9 20.8 78.2
Value Added (in % of GDP) 0.7 19.2 69.6
Value Added (Annual % Change) 9.9 -4.3 -6.5

Source: World Bank - Latest available data.

 
Monetary Indicators 20162017201820192020
Euro (EUR) - Average Annual Exchange Rate For 1 USD 0.940.890.850.890.88

Source: World Bank - Latest available data.

 

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Foreign Trade

The Belgian economy is particularly open, with foreign trade representing 159% of GDP (World Bank, 2020). In addition to being considered an export champion (10th in the world rank - WTO), Belgium plays an important role as a transit and distribution centre for other countries in the European Union. The main export products are medicaments (8%), vehicles (7.5%), blood (6.9%), and petroleum oils (3.4%). The main imports are vehicles (7.6%), medicaments (6.4%), human blood (5.6%), and oil and mineral fuels (3% - Comtrade).

Belgium role as a regional logistical hub makes its economy vulnerable to shifts in foreign demand, particularly with EU trading partners (around 65% of exports and imports). Germany remains the first customer (16.6%), followed by France (13.3%), the Netherlands (11.7%) and the U.S. (8.8%). The main suppliers are the Netherlands (19.2%), Germany (14.6%), France (11.2%) and the United States (5.3%).

According to WTO data, in 2020 exports amounted to USD 419.8 billion, while imports reached USD 396.1 billion. Exports of services totalled USD 113.4 billion, while imports of services stood at USD 115.2 billion. The country’s trade balance is traditionally positive when including services: in 2020 the trade surplus represented around 1.4% of GDP (World Bank). Driven by buoyant world demand, Belgian export growth was strong in the first half of 2021, but came in negative in the third quarter. The National Bank of Belgium forecasts that exports will contribute negatively to GDP in the upcoming years, as continued strong domestic demand should drive up imports and losses in export market shares are projected to continue.

 
Foreign Trade Values 20162017201820192020
Imports of Goods (million USD) 367,378408,915454,947427,708396,132
Exports of Goods (million USD) 395,881430,554468,650446,944419,892
Imports of Services (million USD) 107,417115,140124,928122,524115,242
Exports of Services (million USD) 111,017117,414121,682119,333113,459

Source: World Trade Organisation (WTO) ; Latest available data

Foreign Trade Indicators 20162017201820192020
Foreign Trade (in % of GDP) 157.7165.3166.3163.0160.7
Trade Balance (million USD) 1,9252,706-5043,8541,287
Trade Balance (Including Service) (million USD) 5,6855,263-1,2843,2531,944
Imports of Goods and Services (Annual % Change) 7.55.21.30.8-4.3
Exports of Goods and Services (Annual % Change) 6.25.50.61.0-4.6
Imports of Goods and Services (in % of GDP) 78.282.183.381.280.1
Exports of Goods and Services (in % of GDP) 79.483.283.081.880.6

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20212022 (e)2023 (e)2024 (e)2025 (e)
Volume of exports of goods and services (Annual % change) 7.45.64.13.63.5
Volume of imports of goods and services (Annual % change) 6.46.74.54.03.8

Source: IMF, World Economic Outlook ; Latest available data

Note: (e) Estimated Data

 
International Economic Cooperation
Belgium is a member of the following international economic organisations: Benelux Economic Union, ICC, OECD, European Union, IMF, G-9, G-10, WTO, among others. For the full list of economic and other international organisations in which participates Belgium click here. International organisation membership of Belgium is also outlined here.
Free Trade Agreements
The complete and up-to-date list of Free Trade Agreements signed by Belgium can be consulted here.
 

Main Partner Countries

Main Customers
(% of Exports)
2020
Germany 16.6%
France 13.3%
Netherlands 11.7%
United States 8.8%
United Kingdom 6.0%
See More Countries 43.7%
Main Suppliers
(% of Imports)
2020
Netherlands 19.2%
Germany 14.6%
France 11.2%
United States 5.3%
Ireland 4.9%
See More Countries 44.8%

Source: Comtrade, Latest Available Data

 

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Political Outline

Current Political Leaders
King: Philippe of Belgium (since 21 August 2013);
Prime Minister: Alexander De Croo (since 1 October 2020)
Next Election Dates
Senate and Chamber of Representatives: 2024
Current Political Context
Belgium is a stable country even if cultural tensions between Wallonia (French-speaking) and Flanders (Flemish) have impregnated political life. The political system is a complicated one as there are different majorities at both regional and national levels. The decision-making process is highly controversial in Belgium as leaders of “Communities” can pass decrees and ordinances bearing the same juridical value as federal laws.

The current government is led by Alexander De Croo (Open VLD), who was nominated prime minister almost 500 days after the federal elections following long political negotiations. Different views are represented in the ruling coalition: the liberals (Open Vld and MR), the socialists (Vooruit and PS), the greens (Groen and Ecolo) and the Christian democrats of CD&V.
Main Political Parties
Historically, parties are divided between French and Flemish groups, fuelling intercommunal tensions.

- Workers' Party of Belgium (PTB-PVDA): far-left (ideologies: communism, marxism, marxism-leninism, socialism)
- Socialist Party (PS): centre-left, largest francophone party
- Flemish Socialists and Spirit alliance (SP.A): socialist, Flemish party
- Ecolo: green, francophone party
- Groen: green, Flemish party
- Christian, Democratic and Flemish Party (CD&V): centre-right
- Humanist Democratic Centre (cdH): centre, francophone party
- Flemish Liberal Democrats (Open VLD): centre-right, Flemish party
- Reform Movement (MR): centre-right, francophone party
- New-Flemish Alliance (N-VA): right-wing, pushes for Flemish independence from Belgium
- Flemish Interest
(Vlaams Belang): right-wing populist, pushing for Flemish independence
Executive Power
Chief of the state is the King, who plays a largely ceremonial and symbolic role. The King's primary political function is to designate a political leader (Prime Minister) to form a new government. Following legislative elections, the leader of the majority party (or the leader of the majority coalition) is usually appointed Prime Minister by the King and then approved by the parliament for a four-year term. The King, on recommendation of the Prime Minister, formally appoints the Council of Ministers. At the federal level, executive power is wielded by the Council of Ministers, with each minister heading a governmental department, with a maximum of 15 ministers. The Prime Minister chairs the Council.
Legislative Power
The Belgian Parliament is bicameral and consists of the Senate and the Chamber of Representatives. The Chamber has 150 directly elected members by proportional representation vote. The Senate has 60 members; 50 members indirectly elected by the community and regional parliaments based on their election results, and 10 elected by the 50 other senators. All the members of the Parliament serve 5-year terms.
 

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COVID-19 Country Response

COVID-19 epidemic evolution

To find out about the latest status of the COVID-19 pandemic evolution and the most up-to-date statistics on the COVID19 disease in the Belgium, please visit the dedicated page on the portal of the public agency Sciensano and the StatBel website (in French).
For the international outlook you can consult the latest
situation reports published by the World Health Organisation as well as the global daily statistics on the coronavirus pandemic evolution including data on confirmed cases and deaths by country.

Sanitary measures

To find out about the latest public health situation in Belgium and the current sanitary measures in vigour, please consult the national government’s dedicated website Info-Coronavirus and the official portal Belgium.be, including the up-to-date information on the containment measures put in place and public health recommendations.

Travel restrictions

The COVID-19 situation, including the spread of new variants, evolves rapidly and differs from country to country. All travelers need to pay close attention to the conditions at their destination before traveling. Regularly updated information for all countries with regards to Covid-19 related travel restrictions in place including entry regulations, flight bans, test requirements and quarantine is available on TravelDoc Infopage.
It is also highly recommended to consult COVID-19 Travel Regulations Map provided and updated on the daily basis by IATA.
The US government website of Centers of Disease Control and Prevention provides COVID-19 Travel Recommendations by Destination.
The UK Foreign travel advice also provides travelling abroad advice for all countries, including the latest information on coronavirus, safety and security, entry requirements and travel warnings.

Import & export restrictions

For the information on all the measures applicable to movement of goods during the period of sanitary emergency due to the COVID-19 outbreak (including eventual restrictions on imports and exports, if applicable), please consult the website of the Belgian Customs and Excise Authority (in French, Dutch and German).
The “Guidelines for border management measures to protect health and ensure the availability of goods and essential services” issued by the European Commission can be consulted
here.
For a general overview of trade restrictions due to COVID-19 pandemic, please consult the section dedicated to Belgium on the
International Trade Centre's COVID-19 Temporary Trade Measures webpage.

Economic recovery plan

For the information on the economic recovery scheme put in place by the Belgian government to address the impact of the COVID-19 pandemic on the national economy, please visit the websites of the Public Federal Service for Employment and that of National Bank of Belgium. Further information can be found on the Info-Coronavirus portal and on the Finance Ministry website (in French and Dutch).
The information on the EU’s economic response to COVID-19 and the actions to minimise the fallout on the EU member states’ economies of the COVID-19 outbreak is available on the websites of the
European Commission and the European Council.
For the general overview of the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and macroeconomic) taken by the Belgian government to limit the socio-economic impact of the COVID-19 pandemic, please consult the section dedicated to Belgium in the
IMF’s Policy Tracker platform.

Support plan for businesses

For the information on the local business support scheme established by the government of Belgium to help the business sector to deal with the economic impacts of the COVID-19 epidemic on their activity, please consult the official portal of FPS Economy (in French and Dutch). For an overview in English, refer to the dedicated page on KPMG's website.
For a general overview of international SME support policy responses to the COVID-19 outbreak refer to the OECD's SME Covid-19 Policy Responses document.

You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.

Support plan for exporters

To find out about the support plan for exporters put in place by the government of Belgium, please consult the Belgian Customs and Excise Authority (in French, Dutch and German).
A guarantee scheme to support companies affected by coronavirus outbreak, which also covers public short-term export credit insurance, has been approved by the European Commission.

 

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