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Belgian Economy at a glance

Source: FPS Economy, National Bank of Belgium, World Bank.

  2001 2002 2003 2004
Export (bln. €) 177.5 177.7 180.9 197.1
Export world ranking 11th 10th 10th 10th
Import (bln. €) 170.9 168.2 170.7 188.9
Import world ranking 12th 11th 10th 9th
GDP (bln. €) 254.1 261.1 269.5 283.5
GDP world ranking 20th 18th 18th 16th
GDP growth (%) 0.7 0.9 1.3 2.7
% export to EU 75.4 72.8 74.7 76.9
Inflation (%) 2.3 1.6 1.5 1.9
Unemployment (%) 6.7 7.3 8 7.8
Budget decifit/
surplus as % of GDP
0.6 0.1 0.1 0.0
Public debt (% of GDP) 108 105.4 100 95.7

With an area the size of Maryland and a population similar to Michigan, Belgium is nevertheless a significant player in the world economy. Its GDP ranks among the top 20 in the world, and more than 85% of it was exported in 2004. Belgium is the 10th exporter of goods in the world., and the 9th importer.

Main Belgian export products in 2004 were chemicals and pharmaceutical products (22.7%), transport equipment (13.8%), machinery and appliances (12.9%), base metals (8.4%), plastics and rubber (7.6%).

Trade relations between the United States and Belgium are highly developed. The US is Belgium’s 5th trade partner, and Belgium is the 16th trading partner for the US.

Belgium has the second highest level of productivity per worker in the world (after the US). Other attractions for foreign investors include the low cost of energy for the industrial sector, and the highly developed transport infrastructure. Belgium has the highest density rail network in the world, the 2nd largest seaport in Europe (Antwerp), the 2nd largest petrochemical center in the world (after Houston) and the 5th largest cargo airport in Europe.


Belgium: A Great Place to do Business

1. Strong Economic Performance

A. Economic Growth

The Belgian economy has been growing faster since 2003 than the average for the euro zone, including the neighboring countries France, Germany, and the Netherlands. In 2004 GDP growth was 2.7%, considerably faster than the 1.8% euro zone as a whole, and the 1.6% average of the 3 neighbors.

This trend is likely to continue in 2005, when Belgian GDP is forecasted to grow by 2.5%, and GDP in the euro zone by 1.9%.

The higher growth rates have been the result of higher domestic consumption and investment. Consumers in particular were optimistic about the long-term prospects for the Belgian economy, and benefited from lowering of income tax rates over the last few years.

Belgium has become the 10th importer and exporter worldwide in 2004.

B. Stock Exchange

Belgian stock values increased by almost 40% in 2004, whereas stocks in Paris were up 12.7%, in London 12.4%, in Amsterdam 7.5%, and in New York 5.8%.

The main BEL 20 index increased by 31% in 2004, and its share values more than doubled since March 2003. In January 2005, it went through 3000 points for the first time since April 1998.

The reasons for the strength of the BEL 20 index are multiple:

-many companies listed have been the subject of takeovers and mergers, increasing the stock value (and more takeovers are expected in 2005)

-stocks of small and medium size value (small and mid caps), highly represented in the index, have been highly valued because of high demand

-companies listed have been highly profitable, linked to the strength of the Belgian economy

-Belgian stocks traditionally provide a high pay out ratio in dividends (for example financial stocks), because there is less need to re-invest profits like in manufacturing stocks

-the index has a high proportion of ‘financial’ shares, which is attractive because of low long-term interest rates

-Belgian stocks are less dollar sensitive because the BEL20 lists relatively few multinational corporations

C. High Level of Foreign Direct Investment (FDI)

Belgium was the 5th recipient of Foreign Direct Investment flows (29 billion dollar) in the world in 2003, just behind the US (UNCTAD World Investment Report 2004).
It was ranked 8th worldwide for total foreign direct investment stock (World Competitiveness Yearbook 2004).

Some 1200 US companies are already located in Belgium, employing approximately 140.000 people.

2. Underlying Factors of Economic Success

A. High Productivity Level

Belgium is consistently ranked among the productive nations (output per worker) in the world:

-Ranked 2nd worldwide in 2002 by the ILO, after the US (output per worker)

-Ranked 6th in 2003 (World Competitiveness Report 2004, output per worker/hour).

-Belgium was one of six EU-15 countries with higher productivity levels than the US in 2004 (The Conference Board, January 2005)

B. High Level of Education and Training

Belgian productivity levels are also the result of high investment in the quality of its labor force.

-Because of its location and history, the educational system is highly oriented towards the instruction of foreign languages

-In 2004, Belgium was ranked in the top 10 worldwide for the quality of its educational system, the skills of its labor force, and the transfer of knowledge between universities and industry (World Competitiveness Yearbook, 2004)

-In an area the size of Maryland, Belgium offers 16 university centers, an extensive community of scientific institutes (employing some 50,000 full-time researchers), and R&D in more than 100 Belgian biotechnology companies.

-Belgium is in the top 10 worldwide for business expenditure on R&D per capita, and the of number of patents per capita (World Competitiveness Yearbook, 2004).

-Belgium was the 5th destination for US R&D investment into the chemical and pharmaceutical sectors worldwide.

C. Lower Tax Rates

The nominal corporate tax rate in Belgium was lowered in 2002 to 33.99%, about the EU average now. Significantly, the Belgian government will introduce later this year (June 2005) an innovative tax concept: a law that will allow all existing companies to deduct an estimated equity "cost" from profits in calculating their taxable income. The deduction would be 3.7% of the company’s capital, starting January 1, 2006. This measure will make equity financing of companies much more attractive.

US tax magazines (like Tax Notes) have pointed out that the effective tax rate for US companies in Belgium decreased from 26% in 1999 to 12% in 2002, only slightly higher than the rate in low-tax Ireland (8%).
During the same 1999-2002 period, US profits in Belgium increased by 84% to 6.7 billion $, making Belgium one of the most profitable countries for US companies to do business in the world.

D. A Great Place to do Business

As the host of NATO and EU headquarters, and hundreds of other international organizations and international NGO’s, and within a distance of 200 miles or less to London, Paris, and Frankfurt, Belgium is right at the heart of the political and economic decision-making centers in Europe.

Economically, Belgium is at the center of 60% of the EU’s purchasing power, and more than 70% of its GDP is exported to EU countries. Its logistical tools include the second largest seaport in Europe, the second largest petrochemical center worldwide, and the 5th largest cargo airport in Europe. Belgium is the third pharmaceutical producer, and the second pharmaceutical exporter in Europe.

In terms of quality of life, the UN ranked Belgium sixth worldwide in the world in terms of health and life expectancy, education and earnings (UN Human Development Index 2004).



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