Learn about barriers to market entry and local requirements, i.e., things to be aware of when entering the market for this country.
Belgium boasts an open market, well-connected to the major economies of the world. As a logistical gateway to Europe, host to the EU institutions and a central location closely tied to major European economies (Germany in particular), Belgium is an attractive market and an ideal location for U.S. investors. The Belgian economy continues to attract significant levels of investment in chemicals, petrochemicals, transport equipment, machinery, plastics, mineral products, base metals, precious metals and stones; environmental technologies; food processing and packaging; health technologies; information and communication; and textiles. Finally, Belgium is a highly developed, long-time economic partner of the United States that benefits from an extremely well-educated workforce, world-renowned research centers, and the infrastructure to support a broad range of economic activities.
To counter the economic impact of the COVID-19 pandemic, the federal government prepared a fiscal package – which totaled nearly 2% of GDP – in March 2020, consisting primarily of deferrals of tax and social security payments, along with direct income support measures such as temporary unemployment protections. In addition, the federal government and the financial sector introduced a guarantee scheme for new credits and credit lines of 10.7% of GDP. The Central Bank contributed to this line of efforts by easing a number of prudential measures, including the removal of the counter-cyclical capital buffer. Finally, central authorities made it possible to defer the repayment of credits for financially viable firms and the self-employed until the fall of 2020.
Nonetheless, economic growth in Belgium is set to be hit hard by the COVID-19 outbreak in 2020, but experts forecast that the economy should rebound strongly in 2021-2022. Despite support from fiscal measures, consumption and investment fell as a result of lockdown restrictions. Global supply chain disruptions and a sharp drop in business and consumer confidence have negatively impacted domestic demand in 2020. Moreover, industry analysts anticipate that weak international trade will detract from growth in both 2020 and 2021.
Real GDP growth is forecast to fall from 1.4% in 2019 to -8.75% in 2020, but to quickly rebound to 6.5% in 2021. Domestic demand dropped by 4.4% in the first quarter of 2020. Economic activity, however, is forecast to rebound in the third quarter, as survey indicators point to an acceleration of the recovery in business turnover in June following the lifting of the most restrictive health measures. Household consumption growth will likely drive the recovery in Belgium. Public investment is forecast to rebound progressively through the remainder of the year. Business investment growth is expected to rebound more slowly as business supply chains are expected to take longer to readjust to the new economic reality ushered in by the coronavirus.
The contribution of net exports to real GDP growth is expected to remain negative in 2020 and 2021 amid a fall in the growth of world trade. Reflecting Belgium’s position as a central trading hub, imports are largely expected to grow in line with exports, resulting in a contraction in 2020 and a rebound in 2021. Domestic unemployment is projected to rise, notably due to a higher likelihood of bankruptcies in the most affected sectors such as arts, leisure, hotels and restaurants.
With regards to the COVID-19 pandemic itself, the number of new confirmed cases reached its peak in early April, while the number of subsequent hospitalizations has declined by more than 80%. The healthcare system, which is still among the better systems in the world, has coped well with the rising number of COVID-19 patients.