Belgium flag Belgium: Economic and Political Overview

The economic context of Belgium

Economic Indicators

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 (%) 1.20.43.28.01.3
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

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. Because of rounding, the sum of the percentages may be smaller/greater than 100%.

 

Find more information about your business sector on our service Market reports.

 
 

Find out all the exchange rates daily on our service International currency converter.

 

Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}

Score:
70,1/100
World Rank:
37
Regional Rank:
22

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 

Business environment ranking

Definition:

The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

Score:
7.37/10
World Rank:
25/82

Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024

 

Country Risk

See the country risk analysis provided by Coface.
 

Return to top

Sources of General Economic Information

Ministries
Foreign Affairs, Foreign Trade and Development Cooperation
Federal Public Service Finance
Federal Public Service Employment, Labour and Social Dialogue
Statistical Office
National Institute of Statistics
Central Bank
National Bank of Belgium
Stock Exchange
Brussels, Paris and Amsterdam Stock Exchange
Economic Portals
Belgian Statistics Portal
 

Return to top

Any Comment About This Content? Report It to Us.

 

© Export Entreprises SA, All Rights Reserved.
Latest Update: June 2022