Country Report Belgium December 2009

Summary

The Economist Intelligence Unit expects the government, consisting of the Flemish and francophone Christian Democrats and Liberals and the francophone Socialists, to serve its full term until 2011.
Tensions between Flanders and Wallonia could be stoked by attempts to reduce the budget deficit or by the issue of the Brussels-Halle-Vilvoorde (BHV) constituency boundaries.
The success of two right-wing, populist parties in Flanders in the regional elections in June 2009 will cause the mainstream Flemish parties to adopt a hardline stance on devolution, making a compromise agreement difficult.
The government has implemented a recovery package agreed in early 2009, but we expect the fiscal stimulus element of the package to go partly into reverse in 2010 as the government focuses instead on fiscal consolidation.
After rising sharply to an estimated 6% of GDP in 2009, we expect the budget deficit to widen further to 6.6% of GDP in 2010, before narrowing to 5.5% of GDP in 2011.
After contracting sharply in 2009, we forecast that domestic and foreign demand will both resume moderate growth in 2010-11, underpinning GDP growth of 1% in 2010 and 1.4% in 2011.

The German-speaking parliament has declared that Flemish plans to redraw the BHV electoral boundaries create a conflict of interest for German-speakers, keeping the issue out of the federal parliament for another 120 days.
Following a summit meeting of the EU heads of state on October 29th-30th, prime minister Herman Van Rompuy emerged as a possible candidate for the new post of EU president.
Although GDF Suez has agreed to pay a tax on nuclear energy in exchange for the government extending the lives of Belgium's nuclear reactors, the company has refused to pay a one-off €500m fee to the state in 2009.
General Motors decided on November 4th not to sell its European subsidiary, Opel, to the Canadian-Russian consortium Magna, but the Opel plant in Antwerp is still likely to be closed.
According to flash estimates published by the Institute for National Accounts on October 30th, Belgium emerged from the recession in the third quarter of 2009, with GDP growing by 0.5% quarter on quarter.
New passenger car registrations continued to fall year on year in the third quarter of 2009, indicating continued weak consumer demand.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60;89;37
NAICS Code: 52;81;336