The COVID-19 pandemic negatively impacted the Belgian economy in 2020 and its effects will continue into 2021. According to the National Bank of Belgium, real GDP contracted by 6.2% in 2020, and the impact on public finances led to a deficit of 10.1% of GDP and a national debt level of 115% of GDP. Early economic forecasts for 2021 indicate that Belgium’s GDP might grow by as much as 3.9%, and the deficit will likely shrink to 7.6% of GDP. Belgium will continue to rely on European Union financial support mechanisms, as well as interventions by its regional governments, as it aims to restart and rebuild the economy and implements a comprehensive economic recovery plan in the wake of the global health pandemic in 2021.
COVID-19 restrictions are likely to remain in place through 2021. As Belgium’s vaccination plan gains momentum, however, those measures are expected to be rolled back. Support measures, still ongoing at the beginning of 2021, should limit job losses (at least in the short term) and constrain the number of bankruptcies in the most affected sectors such as leisure, restaurants, hotels, and transport.
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. As it stands, the center-left government that took office on October 1, 2020 will not reverse this decision.
Belgium boasts an open market well connected to the major economies of the world. As a 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
Belgium boasts a dynamic economy and attracts significant levels of investment in chemicals, petrochemicals, plastics and composites; environmental technologies; food processing and packaging; health technologies; information and communication; and textiles, apparel and sporting goods, among other sectors. In 2020, Belgian exports to the United States were worth $29 billion, and the U.S. market represented Belgium’s 5th largest export destination. Of note, major Belgian exports included chemicals (65.6%), machinery and equipment (9.7%), and transport equipment (4.5%). In 2020, the United States ranked as Belgium’s 4th largest supplier of imports with a total value of imported goods of nearly $27 billion. Major U.S. exports to Belgium included chemicals (38.5%), transport equipment (12.9%) and machinery and equipment (12%).
To fully realize Belgium’s employment potential, it will be critical to address the fragmentation of the labor market. Job growth accelerated in Belgium prior to the COVID-19 pandemic (+6.9% in the period 2014-2019), driven by the cyclical recovery and the positive impact of past economic and market reforms. Large regional disparities in unemployment rates persist, however, and there is a significant skills mismatch in several key sectors.
|TI Corruption Perceptions Index||2020||15 of 180||http://www.transparency.org/research/cpi/overview|
|World Bank’s Doing Business Report||2020||46 of 190||http://www.doingbusiness.org/en/rankings|
|Global Innovation Index||2020||22 of 131||https://www.globalinnovationindex.org/analysis-indicator|
|U.S. FDI in partner country ($M USD, historical stock positions)||2019||$63.2||https://apps.bea.gov/international/factsheet/|
|World Bank GNI per capita||2019||$48,030||http://data.worldbank.org/indicator/NY.GNP.PCAP.CD|