Country Report Belgium January 2009

Outlook for 2009-10

• 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.
• The change at the head of the government, from Yves Leterme to Herman Van Rompuy, has refocused attention on the smouldering crisis over Flemish demands for the devolution of power to the regions.
• Devolution negotiations will be carried out by regional and community politicians, but we expect little progress to be made before the regional elections in June 2009, as parties are unwilling to make concessions.
• The government will try to implement an economic recovery programme, aimed at achieving wage moderation, encouraging lending, boosting purchasing power and supporting public investment.
• We expect the budget deficit to grow to 2.3% of GDP in 2009 before narrowing to 1.6% of GDP in 2010. The government expects the economic recovery package to cause the deficit to rise to 1.8% of GDP in 2009.
• Domestic and foreign demand will fall in 2009, causing GDP to contract by 2.1%. In 2010 private consumption, investment and export growth will pick up moderately, causing GDP growth to rise to 0.5%.

Monthly review

• On December 19th the prime minister, Mr Leterme, tendered his resignation following allegations that he attempted to influence judicial proceedings surrounding the state-organised buy-out of Fortis by French bank BNP Paribas.
• On December 30th King Albert II swore in Mr Van Rompuy as prime minister. Mr Van Rompuy, a Flemish Christian Democrat like Mr Leterme, heads the same five-party coalition as his predecessor.
• Leading Flemish politicians considered and rejected the idea of establishing a short-term government to run the country until June 2009, when early federal elections could be held alongside regional elections already scheduled then.
• The previous government under Mr Leterme agreed on an economic recovery package that Mr Van Rompuy will implement. This package focuses on the inter-professional accords and a strategy for stimulating the economy.
• Consumer confidence has hit a ten-year low, largely as a result of growing concern about employment prospects.
• Business confidence in December 2008 reached a record low in the 30-year history of the indicator. The largest fall in confidence took place in the industrial sector.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60;49
NAICS Code: 52;22

This report covers the following industry codes:
SIC Code: 60;49
NAICS Code: 52;22