Country Risk Rating

The political and economic situation is good. A basically stable and efficient business environment nonetheless leaves room for improvement. Corporate default probability is low on average. - Source: Coface

Business Climate Rating

The business environment is very good. Corporate financial information is available and reliable. Debt collection is efficient. Institutional quality is very good. Intercompany transactions run smoothly in environments rated A1.


  • Optimal location between UK, Germany, and France
  • Presence of European institutions, international organizations, and global groups
  • Ports of Antwerp (second largest in Europe) and Zeebrugge, canals, motorways 
  • Well-trained workforce through professional education, multilingualism 
  • Net external creditor position
  • Excellent business climate


  • Political and financial tensions between Flanders and Wallonia
  • Complex institutional structure and multiple administrative levels
  • Strong dependence on the Western European situation (goods and services exports = 82% of the GDP)
  • Exports concentrated on intermediate products and the European Union
  • High level of structural unemployment
  • Heavy public debt
  • Tight housing market 
  • Saturation of transport infrastructures

Current Trends

Consolidation of Growth in 2018

Growth accelerated in 2017. The components of demand, with the exception of the investment in housing, generally posted more dynamic growth than in 2016. Net exports, however, contributed only slightly to this recovery. While exports, which account for 85% of the GDP, benefited from strong growth in the Eurozone, imports rose, driven by rising energy costs and domestic demand. The recovery in growth should be consolidated in 2018. Household consumption will remain the main driving force. Purchasing power should benefit from an increase in disposable income as a result of tax cuts granted to households as part of the tax shift and lower inflation. The good performance of the labor market would continue to favor employment. Favorable financing conditions and declining employer contributions would support the rise in investment, while the rate of utilization of production capacity will remain above its long-term level. The wage moderation measures (index jump calculated on the basis of the health index) have also helped to improve the profitability of Belgian companies, but the latter should only progress slightly following the restoration of the index. Public investment is also expected to increase more rapidly than in 2017, driven by Flanders investment in the Oosterweel link (Antwerp ring road).

Exports should remain strong thanks to the expected growth of Belgium’s three main trading partners, namely Germany, France and the Netherlands. However, they could suffer from the decline in their competitiveness because of the rising cost of labor. The contribution of net exports would remain low as domestic demand will continue to pull imports.

Slower Decline in the Structural Public Deficit in 2018

The fiscal deficit contracted in 2017 largely due to higher budget revenues that benefited from the economic recovery and low sovereign rates. However, it should stabilize in 2018 despite a more expansionary fiscal policy. In fact, the government plans to encourage activity by lowering taxes for households and businesses. Current spending is also expected to decline, but total spending would decrease to a lesser extent as a result of higher investment spending. The 2018 budget should result in a structural improvement of the budget balance of only 0.3% of the GDP at the risk of not meeting the requirements of the European Commission. Belgium has committed to reducing the structural deficit by 0.6% per year until 2019, which would eventually allow it to bring the public debt closer to 100% of the GDP threshold. The weight of the latter remains substantial and translates into an interest charge equivalent to more than 2% of the GDP. However, debt service would continue to contract as maturing government bonds will be refinanced at more favorable rates for the government. The resale of part of the state’s stake in BNP Paribas will not, however, compensate for the progress of loans granted under the social housing policy.

The current account would remain in equilibrium. The trade surplus would fall slightly under the pressure of imports. Services will remain in surplus through IT, telecommunications, concession fees, transportation and trading.

The Coalition Remains in Power

The federal government of Charles Michel is a centre-right coalition resulting from the federal elections of the 25th May 2014 and dominated by the Flemish parties. It includes Nieuw-Vlaamse Alliantie (N-VA), Christen-Democratisch en Vlaams (CD&V) and Open Vlaamse Liberalen in Democraten (Open VLD). The three Flemish parties of the coalition a few months earlier formed the same coalition within the Flemish government. As for the Reformist Movement, it is the only French-speaking party of the federal majority. The socialist party relegated to the opposition after 26 years of uninterrupted presence in the Belgian federal government, remains the top political force among Francophones. However, it seems to be weakened. The party has in fact been shaken by the proliferation of political scandals in 2017. At the beginning of this year, Wallonia was rocked by the Publifin affair, a public company that shares the management of local authorities (electricity, etc.) based in Liège, which has paid local elected representatives for services that have not been rendered. In May 2017, the Samu Sociale case triggered a controversy related to the compensation of its directors and resulted in the resignation of Yvan Mayeur, mayor of Brussels. These revelations should somewhat change the political landscape in Belgium, while 2018 should experience both a regional and municipal election. The results of these two deadlines should also give an overview of the electoral dynamics that should operate during the legislative elections of 2019.


Coface (01/2018)