Belgium: Economic and Political Overview
In this page: Economic Outline | Political Outline | COVID-19 Country Response
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.
Situated between the UK, Germany and France, Europe’s three main economies, Belgium benefits from a strategic geographical position. Despite experiencing a historic recession due to the COVID-19 pandemic, the Belgian economy rebounded strongly in 2021 and the first half of 2022. However, high energy prices, declining confidence and weakening international trade slowed GDP growth in the second part of the year, with the IMF estimating an overall growth of 2.4%. Private consumption is expected to remain weak until mid-2023 despite the automatic indexation of wages, same as for international trade (Belgium is highly exposed to the performance of its main trading partners); thus the IMF forecasts a growth rate of only 0.4% this year before a rebound in 2024 (1.4%).
As the government measures taken to contain the effects of the pandemic weighed considerably less on public finances in 2022, the budgetary cost of measures to mitigate the impact of high energy prices contributed to a high budget deficit (4.8% - IMF). In 2023, the government deficit is forecast at 4.6% by the IMF, although the European Commission expects it to increase to 5.8% amid lower corporate tax revenue, the automatic indexation of public sector wages and social benefits, and a rising interest rate burden. After decreasing to 103.9% in 2022 - from 108.4% one year earlier - the debt-to-GDP ratio is expected to rise to 105.1% of GDP this year and 107.2% in 2024, driven by high budget deficits. Headline inflation reached an unusually high level of 9.5% in 2022 as the sharp increases of wholesale gas and electricity prices have transmitted quickly to retail prices. Both headline and core inflation are projected to remain high in 2023 (4.9%) before subsiding the following year (1.1% as per the IMF forecast, 3.3% according to the EU Commission).
Unemployment decreased to 5.4% in 2022; however, rising uncertainty and the downturn in economic activity may moderate the performance of the labour market, with the level of unemployment floating around 5.6% over the forecast period (IMF). 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. Overall, Belgian citizens enjoy a high GDP per capita, estimated on average at USD 62,065 by the IMF for 2022.
| Main Indicators | 2020 | 2021 | 2022 (E) | 2023 (E) | 2024 (E) |
|---|---|---|---|---|---|
| GDP (billions USD) | 524.79 | 594.50 | 582.21 | 624.25 | 642.69 |
| GDP (Constant Prices, Annual % Change) | -5.4 | 6.1 | 3.1 | 0.7 | 1.1 |
| GDP per Capita (USD) | 45,545 | 51,451 | 50,114 | 53,378 | 54,770 |
| General Government Balance (in % of GDP) | -6.5 | -5.2 | -4.8 | -5.2 | -5.5 |
| General Government Gross Debt (in % of GDP) | 112.0 | 109.2 | 105.3 | 106.0 | 108.3 |
| Inflation Rate (%) | 0.4 | 3.2 | 10.3 | 4.7 | 2.1 |
| Unemployment Rate (% of the Labour Force) | 5.6 | 6.3 | 5.5 | 6.0 | 6.0 |
| Current Account (billions USD) | 5.80 | 2.56 | -19.60 | -17.01 | -9.17 |
| Current Account (in % of GDP) | 1.1 | 0.4 | -3.4 | -2.7 | -1.4 |
Source: IMF – World Economic Outlook Database, Latest data available.
Note : (E) Estimated data
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 (0.7%) 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. In 2022, the production value of the agricultural sector increased by 19.5%; however, rising energy costs and inflation directly affected all inputs to the agricultural sector: expenditure on fertilisers rose an estimated 86% in 2022, energy by 67.3% (StatBel).
The industrial sector accounts for 19.6% of 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%).
The Belgian economy is largely oriented towards services. In fact, the tertiary sector accounts for 68.8% 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, although it was affected by the COVID-19 pandemic: in 2021, overnight stays increased by 45% on the previous year, but it was still 31% lower than the 2019 level (StatBel).
| 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 | 19.6 | 68.8 |
| Value Added (Annual % Change) | -3.8 | 1.3 | 7.1 |
Source: World Bank, Latest data available.
Find more information about your business sector on our service Market Reports.
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.
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.
Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024
See the country risk analysis provided by Coface.
The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House
Any Comment About This Content? Report It to Us.
© eexpand, All Rights Reserved.
Latest Update: September 2023
Reserved for registered profiles