The Belgian economy has been recovering at a slow pace. After having settled at around 1.3 % in 2014 and 2015, real growth is forecast to rise to 1.7 % in 2017 as companies start reaping the benefits of improved competitiveness and employment growth provides broader support to household spending. At the same time, a less supportive external environment risks delaying the transmission of improving competitiveness into export, investment and job growth. Lower growth compared with pre-crisis performance is in line with lower estimates for potential growth as a result of weakened productivity growth. A fall in potential growth entails long-term risks, particularly in view of the challenges Belgium faces as regards the long-term sustainability of its public finances.
Belgium is experiencing no macroeconomic imbalances. A weak export and competitiveness performance is coupled with high public indebtedness, which may pose risks going forward. However, recent developments point to a stabilisation of export market shares and a reduction in wage growth. Even though public indebtedness is elevated and not on a firm downward path, which implies vulnerabilities, short-term risks appear contained. Recent policy measures include wage moderation and reductions of social security contributions. To ensure the durability of the correction, structural reforms of the wage-setting framework would be needed. The fiscal effort required to ensure the long-term sustainability of public finances is more demanding in a context of subdued nominal growth.
Read a complete analysis of Belgium's economy in the country report 2016 [2 MB]
2015 recommendations in brief
The Commission has made four country-specific recommendations to Belgium to help it improve its economic performance. These are in the areas of: public finances and pensions; taxation; labour market; wage-setting.