Country Report Belgium February 2010

Outlook for 2010-11

• 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 and by the issue of the Brussels-Halle-Vilvoorde (BHV) constituency boundaries.
• If Jean-Luc Dehaene does not negotiate an agreement on BHV by March 2010, it could strengthen voter support for hardline parties and could result in a constitutional crisis following the next federal elections (by June 2011).
• The economic recovery measures implemented by the previous government will be continued, but we expect the fiscal stimulus measures to go partly into reverse in 2010.
• 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 1.2% in 2011.

Monthly review

• Yves Leterme's transition back into the role of prime minister has been much smoother than many had feared, reflecting a more conciliatory leadership style compared with his previous tenure.
• Jean-Luc Dehaene has been conducting negotiations on the issue of the bilingual voting constituency, BHV, behind closed doors.
• On January 15th Pope Benedict XVI appointed Andre Leonard to succeed Cardinal Godfried Danneels as the primate of Belgium. Mr Leonard's ideals are much more conservative than those of his predecessor.
• The High Council of Finance released a report warning that, without measures beyond those stipulated in the 2010 budget, Belgium's structural deficit will worsen owing to the demands of population ageing.
• Belgium's highest judicial body, the Council of State, agreed to relax bank secrecy laws in order to fight corruption and fiscal fraud better.
• According to the National Bank of Belgium (NBB, the central bank), savings increased sharply by 30% year on year in 2009.
• Unemployment continued to rise, from 7.5% in January to 8.1% in November.

Source: Country Report

This report covers the following industry codes:
SIC Code: 49
NAICS Code: 22

• Highlights
• Outlook for 2010-11: Domestic politics
• Outlook for 2010-11: International relations
• Outlook for 2010-11: Policy trends
• Outlook for 2010-11: Fiscal policy
• Outlook for 2010-11: Monetary policy
• Outlook for 2010-11: International assumptions
• Outlook for 2010-11: Economic growth
• Outlook for 2010-11: Inflation
• Outlook for 2010-11: Exchange rates
• Outlook for 2010-11: External sector
• Outlook for 2010-11: Forecast summary
• The political scene: Yves Leterme returns to power with conciliatory approach
• The political scene: BHV negotiations are under way, but could be derailed
• The political scene: New primate of Belgium is appointed
• Economic policy: High Council of Finance recommends spending cuts
• Economic policy: Bank secrecy legislation is approved
• Economic performance: Confidence indicators show mixed signals
• Economic performance: Unemployment rises
• Economic performance: Savings skyrocket in 2009
• Economic performance: Trade balance is positive
• Data and charts: Annual data and forecast
• Data and charts: Quarterly data
• Data and charts: Monthly data
• Data and charts: Annual trends charts
• Data and charts: Monthly trends charts
• Data and charts: Comparative economic indicators
• Basic data
• Political structure