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 the United Kingdom, Germany and France
  • Presence of European institutions, international organizations and global groups
  • Ports of Antwerp (second largest in Europe) and Zeebrugge, canals and motorways
  • Well-trained workforce through vocational education, multilingualism


  • Political and financial tensions between Flanders and Wallonia
  • Complex institutional structure and multiple administrative levels
  • Highly dependent on the Western European economy (exports of goods and services = 82% of GDP)
  • Exports concentrated on intermediate products
  • High structural unemployment
  • Heavy public debt
  • Tight housing market
  • Saturated transport infrastructure

Current Trends

Growth to mark time in 2019

Belgium’s economic expansion faltered slightly in 2018, echoing the performances of other eurozone countries. Domestic demand remained buoyant, driven by resilient household consumption and increased investment. Unlike in 2017, exports made a small contribution to activity. Growth is expected to stagnate again in 2019, with domestic demand still the main driver. A less supportive European environment and weaker business confidence are expected to cause private investment to moderate. At the same time, the increase in public investment observed following the 2018 municipal elections is expected to be temporary and this will be only slightly compensated for by the measures contained in the Investment Pact. Following the government’s collapse in December 2018, some of the investments announced by Prime Minister Charles Michel will likely be withdrawn. Indeed, the caretaker government will only be enabled to deal with projects that have been approved by the former coalition, such as the completion of the RER rail project. However, consumption is expected to take over. Household disposable income is poised to continue growing, boosted by a buoyant labour market and tax cuts for households. However, consumption could be somewhat depressed by continued high inflation resulting from increased domestic production costs due to tight labour market conditions, on the one hand, and from energy prices, which refuse to go down, on the other. External demand is expected to make a less robust contribution due to the slowdown of Belgium’s main eurozone partners. At the same time, export competitiveness will likely continue to fall due to the rise in domestic wages and euro appreciation against the US dollar.

Slight deviation from the medium-term budgetary objectives

After falling in 2017, the government deficit stabilized in 2018. Budgetary expenditures and revenues fell by 0.3 and 0.2 percentage points of GDP respectively. The drop in revenues is attributable to the slight slowdown in activity but also to the reduction in compulsory levies as part of the tax shift. Increases in capital expenditure at the municipal level were offset by a larger than expected decrease in federal spending. However, the structural balance declined compared with 2017 to reach 1% of GDP. The government deficit is expected to stabilize in 2019. The fall of Charles Michel’s government and the appointment of a caretaker government will likely cancel the reforms planned in the 2019 budget. In fact, as the prerogatives of the new government are limited, the state’s budget is divided into provisional twelfths, i.e. one-twelfth of the previous year’s budget for each month of the financial year. As nominal growth is expected to remain higher than interest rates, public debt should continue to decline in 2019, despite an unchanged primary balance.

The current account should remain in balance. The trade surplus is expected to fall slightly under import pressure. Services will remain in surplus thanks to IT, telecommunications, royalties, transport and trading.

Government falls on the eve of an election year

Given that the country has just entered an election year, the political crisis that shook Belgium in December 2018 is likely to lead to a long period of political uncertainty. Following a disagreement over the ratification of the Marrakech Global Migration Pact, the Nieuw-Vlaamse Alliantie (N-VA), the main Flemish majority party, left the government. The new government of Charles Michel, a minority government, had only 52 deputies out of 150 in the House of Representatives and was forced to rely on Parliament to endorse its decisions. Faced with the risk of a motion of no confidence from the opposition (socialist and ecologist), Charles Michel submitted his resignation to King Philippe on December 18, 2018. The King ruled out the possibility of holding early elections but asked the Prime Minister to lead a caretaker government until the next election deadline. Federal parliamentary elections are expected to be held on May 26 together with regional and community (elections of representatives of regional and community parliaments) and European elections. As supporters of confederalism begin to make their voices heard, it is highly likely that the federal elections will lead to a fragmented Parliament that reflects the divisions that are undermining the country. Acting as a test, the communal and provincial elections confirm two trends that were already perceptible: on the one hand, the gap between Flemish and Walloon people is widening, and on the other hand, the major political parties are weakening in favour of more radical movements. Thus in Wallonia, the Socialist Party was unable to limit the breakthrough of the Belgian Labour Party (PTB), a radical left-wing formation, and in Flanders, the N-VA recorded a slight decline in the cities where the far right is making progress.


Coface (02/2019)