Country Risk Rating

Changes in generally good but somewhat volatile political and economic environment can affect corporate payment behavior. A basically secure business environment can nonetheless give rise to occasional difficulties for companies. Corporate default probability is quite acceptable 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, motorways
  • Well-trained workforce through vocational education, multilingualism


  • Political and financial tensions between Flanders and Wallonia
  • Complex institutional structure and multiple administrative levels
  • Heavily dependent on the Western European economy (exports of goods and services = 107% of GDP, of which more than 70% to the rest of the EU)
  • Exports concentrated on intermediate products
  • High structural unemployment
  • Heavy public debt
  • Tight housing market
  • Saturated transport infrastructure

Current Trends

A rebound limited by the lagged recovery in world trade

Belgium will make a return to growth in 2021, after being one of the countries hardest hit by the pandemic in 2020, both in terms of health (highest number of deaths per inhabitant at the end of 2020) and the economy. To limit the spread of the virus, the country’s governments were forced to impose a lockdown and close non-essential businesses in spring and again in November, leading to an unprecedented drop in inactivity. As the health situation gradually improves, domestic demand is expected to rebound sharply in 2021. Households, whose purchasing power was boosted by government measures (short-time work scheme, aid for self-employed people), will consume some of the large precautionary savings (18% of gross disposable income by mid-2020) built up during the crisis. With household consumption dictated by the uncertainty surrounding the health situation, the rebound should accelerate in the second half of the year. Companies are also expected to step up their investment after receiving extensive government support (state-guaranteed loans, postponement of social security, and tax deadlines). However, the resumption of investment will be limited by economic uncertainty, less fluid trade between the United Kingdom and the European Union (EU) - despite the signing of an agreement in December 2020 - and the gradual reorganization of production chains. Heavily dependent on regional trade - even though 40% of exports to the rest of the EU are transit imports - the economy will be affected by the lagged catch-up in trade. Furthermore, the government is planning to introduce new measures (estimated by the European Commission at 0.6% of GDP), including increases in health sector wages and the minimum pension, to support the economic recovery.

Public accounts are still deep in deficit to support activity

The public deficit will remain very large in 2021, after deteriorating sharply in 2020 due to the expenditure incurred to curb the economic and health consequences of the epidemic (total cost estimated at 3.9% of GDP in 2020), coupled with a fall in revenue linked to activity. As most support measures have been extended at least until the beginning of 2021, the slight reduction in the deficit will essentially be due to a rebound in revenues resulting from economic growth, plus an increase in excise duties on tobacco. After rising sharply in 2020, like in other Eurozone countries, public debt is set to stabilize, albeit at a very high level.

The current account is expected to remain relatively balanced in 2021. Because of the country's integration into European production chains and its status as a regional hub, imports move in line with exports, such that the balance of goods and services has been fairly balanced in recent years. Concomitantly, the income balance has been slightly in deficit (-0.4% of GDP in the first half of 2020), with dividends on foreign investments in the country exceeding those from Belgian investments abroad. Although very large, the external debt (268% of GDP, three-quarters of which corresponds to private liabilities) is much lower than the substantial assets held abroad, with the result that the country had a net external surplus position of 45% of GDP at the end of June 2020.

A disparate coalition made up of four groups

The triple elections (federal, regional and European legislative elections) held in May 2019 led to further fragmentation of the political landscape and were followed by long months of fruitless negotiations. Then, in March 2020, a minority government (38 seats out of 150) led by Sophie Wilmès of the French-speaking Reform Movement (MR, center-right), was set up as an emergency measure to combat the pandemic. However, it was not until 1 October 2020 that a majority government coalition was formed under the leadership of the Dutch-speaking liberal Alexander De Croo. This coalition, which has 87 seats in the house of representatives, is made up of four groups (socialists, liberals, environmentalists, and Christian Democrats), divided into seven parties: the French-speaking (PS, 20 seats) and Dutch-speaking (SPA, 9) socialist parties, the French-speaking (Ecolo, 12) and Dutch-speaking (Groen, 8) environmentalists, the French-speaking (MR, 14) and Dutch-speaking (Open VLD, 12) liberals and the Flemish Christian Democrats (CD&V, 12). Despite their rapid progress in the elections, the parties at either end of the political spectrum, namely the VB (far-right Flemish nationalists, which went from 3 to 18 seats) and the PTB (unitary far-left, from 2 to 12 seats) are therefore in the opposition, as is the leading party, the N-VA (Flemish conservatives, 25 seats). While the pandemic emergency and the fear of holding new elections in this setting made it possible to form a government coalition 494 days after the legislative elections, the disparate nature of the alliance makes it vulnerable. Political instability seems destined to continue in the country, as the landscape is so fragmented, with a growing divergence between Flanders, which is heading increasingly towards the right, and Wallonia, which is moving left.


Coface (02/2022)