The COVID-19 pandemic negatively impacted the Belgian economy in 2020. The National Bank of Belgium has estimated that real GDP could contract by as much as 8% in 2020, and the impact on public finances could lead to a deficit of at least 7.5% of GDP, withthe national debt to increase to around 115% of GDP by the end of 2020. Belgium will rely on European Union financial support mechanisms and interventions by its regional governments to pull itself out of the economic crisis created by the global health pandemic.
Belgium holds a unique position as a logistical hub and gateway to Europe, which will be of critical importance to jump-start the economy. Since June 2015, the Belgian government has undertaken a series of measures to reduce the tax burden on labor and to increase Belgium’s economic competitiveness and attractiveness to foreign investment. A July 2017 decision to lower the corporate tax rate from 35 to 25 percent further improved the investment climate. Post-pandemic measures to attract investment are under review with national and regional authorities.
In January 2016, the European Commission ruled that Belgium had to reclaim more than USD 900 million from companies that had benefitted from “excess profit” rulings. The scheme had reduced the corporate tax base of the companies by between 50% and 90% to discount for excess profits that allegedly resulted from being part of a multinational group. However, in 2019 the EU General Court decided that the excess profit ruling was not a State-aid scheme. The Commission has appealed the judgment to the European Court of Justice; these proceedings are ongoing.
Belgium boasts an open market well connected to the major economies of the world. As a logistical gateway to Europe, host to major EU institutions, and a central location closely tied to the major European economies, Belgium is an attractive market and location for U.S. investors. Belgium is a highly developed, long-time economic partner of the United States that benefits from an extremely well-educated workforce, world-renowned research centers, and the infrastructure to support a broad range of economic activities. Brexit and pandemic recovery create uncertainties and it is difficult to predict what the impacts will be on the Belgian economy.
Belgium has a dynamic economy and attracts significant levels of investment in chemicals, petrochemicals, plastic and composites; environmental technologies; food processing and packaging; health technologies; information and communication; and textiles, apparel and sporting goods, among other sectors.
To fully realize Belgium’s employment potential, it will be critical to address the fragmentation of the labor market. Jobs growth was accelerating until the COVID-19 pandemic, driven by the cyclical recovery and the positive impact of past reforms. Large regional disparities in unemployment rates persist, and there is a significant skills mismatch in several key sectors. Temporary unemployment skyrocketed to 1.26 million workers in April, 2020, but it is uncertain how the pandemic will impact overall unemployment in 2020.
|TI Corruption Perceptions Index||2019||17 of 180||http://www.transparency.org/
|World Bank’s Doing Business Report||2020||46 of 190||http://www.doingbusiness.org/en/rankings|
|Global Innovation Index||2019||23 of 129||https://www.globalinnovationindex.org/
|U.S. FDI in partner country ($M USD, historical stock positions)||2018||$64,051||https://apps.bea.gov/international/factsheet/
|World Bank GNI per capita||2018||$45,910||http://data.worldbank.org/