Public Investment in Belgium - Current State and Economic Impact

De Belgische overheidsinvesteringen, en in het bijzonder het deel ervan dat aan infrastructuur wordt besteed ligt relatief laag in historische context en in vergelijking met de buurlanden.. Een simulatie met het QUEST III- model van de Europese Commissie suggereert dat een permanente stijging van de overheidsinvesteringen met 0,5% van het bbp leidt tot een groei in bbp, particuliere consumptie en particuliere investeringen. De impact van alternatieve financieringsmechanismen wordt vergeleken. Ten slotte blijkt dat een budget-neutrale verschuiving van overheidsinvesteringen ten gunste van infrastructuurwerken belangrijke voordelen oplevert in termen van het bbp en zijn belangrijkste componenten, en dit reeds op middellange termijn.

De Belgische ICT in vogelvlucht - Economische betekenis en positionering t.o.v. de buurlanden

Deze studie bespreekt de productie en het gebruik van ICT in België en identificeert waar het land ten opzichte van de buurlanden sterk of zwak in staat. Het betreft zowel ICT-goederen als -diensten, met de kanttekening dat de productie van de diensten bijna zeven keer zo hoog is als die van de goederen. Het gebruik wordt in deze studie beperkt tot het gebruik als productiemiddel, niet als consumptiegoed. De ICT-bedrijfstakken kenmerken zich in de Belgische economie als dynamische bedrijfstakken, met een hoge toetredingsratio, een hoge arbeidsproductiviteit en een relatief hoge rendabiliteit. De ICT-diensten leveren bovendien een belangrijke bijdrage tot de buitenlandse handel. De ICT is sterk met de Belgische economie verweven. Ten opzichte van de buurlanden is het aandeel van de ICT in de economie echter klein. Ook ten opzichte van de buurlanden is het aandeel in de buitenlandse handel van goederen klein en valt de innovatie in termen van patentaanvragen tegen. Het ICT-kapitaal levert naar verhouding een minder sterke bijdrage tot de economische groei. Die bijdrage lijkt bovendien af te nemen. Binnen de Belgische ICT steekt de telecommunicatie relatief gunstig af, met een relatief groot aandeel in de economie en de uitvoer van diensten. In België is ze de belangrijkste gebruiker van ICT-producten en kan zo een motor voor de ontwikkeling van ICT zijn.

De prijs van elektriciteit en aardgas voor ondernemingen in België - Samenstelling, niveau en evolutie ten opzichte van de buurlanden

Monitoring van de relancestrategie van de Federale regering – Voortgangsverslag

Het voorliggende document is het vierde zesmaandelijkse voortgangsrapport waarin het Federaal Planbureau (FPB) verslag uitbrengt over de monitoring van de relancestrategie die door de Federale regering in de zomer van 2012 werd opgestart.

Dit voortgangsverslag maakt een oplijsting van de maatregelen die opgevolgd worden en geeft een stand van zaken van de voortgang van uitvoering van die maatregelen (situatie op 30 juni 2014).

Short Term Update 04-12 : Special Topic - Long-term care organisation at the regional level: similar systems, different futures?

Headlines Belgian Economy

The FPB’s latest forecast dates from September and predicted, conditional on our traditional assumption of unchanged budgetary policy, a GDP growth rate of -0.1% in 2012 and 0.7% in 2013 for the Belgian economy. This forecast was established against a background of euro area GDP growth amounting to -0.5% and 0.3% for those years respectively.

The Belgian GDP flash estimate matched our forecast of zero qoq GDP growth in 2012Q3, and recent forecasts of the European Commission (October) and the OECD (November) were in line with the FPB forecast. National as well as international leading indicators (such as the Ifo, PMI, and the NBB business cycle indicators) are tentatively stabilising, implying that a modest recovery for the euro area as a whole and for Belgium in the course of 2013 remains plausible.

We have not yet estimated the economic impact of the Belgian government’s decisions taken in November (which are summarised in the “policy measures” section on page 21), but expect it to be quite small. The federal government’s effort to reduce the budget deficit to 2.15% of GDP in 2013 focuses on measures of which the impact on economic activity should be limited.
Important risks to the international scenario still remain. These encompass a new intensification of the European sovereign debt crisis, the possibility that the US economy will fall back into recession if the fiscal cliff materialises, and a surge in oil prices because of turmoil in the Middle East. Finally, additional fiscal consolidation efforts in the euro area could have adverse effects on short-term aggregate demand as there is evidence that fiscal multipliers are currently higher than in normal economic conditions.

Our next short-term forecast will be published in February 2013.

STU 04-12 was finalised on 4 December 2012.

Short Term Update 03-12 : Special Topic - Is the Belgian economy more energy sensitive than other European economies?

Since 2011Q2, economic growth in the euro area has been affected by the global slowdown and, above all, by the sovereign debt crisis. After negative GDP growth in 2011Q4 and 2012Q2, economic activity is expected to have contracted further in 2012Q3, resulting in a 0.5% decline in real GDP this year. A slight recovery is expected in the course of 2013, but annual euro area GDP growth should remain limited to 0.3%. This scenario remains highly uncertain as policy makers' decisiveness in tackling the euro crisis will be crucial to restore consumer and investor confidence.

Belgian economic activity should decline slightly in 2012 (-0.1%) due to adverse economic conditions in Europe and budgetary austerity. The recent development of consumer and business confidence suggests that Belgian economic activity should stabilize in 2012Q3 after a marked decline in 2012Q2. From 2012Q4 onwards, GDP growth should gradually pick up in the wake of a tentative upswing in the euro area and reach 0.7% on an annual basis in 2013.

Domestic employment fell in 2012Q1 and should only start to recover from the beginning of 2013 onwards. In 2012, the net increase in employment should amount to 11 000 units on average as it benefits from a favourable carry-over from 2011. In 2013, employment is expected to rise by 13 700 units. As employment growth falls behind the increase in the labour force for two consecutive years, unemployment is expected to rise by 9 100 units this year and by 24 000 units next year. As a result, the harmonised unemployment rate (Eurostat definition) for Belgium should rise from 7.2% in 2011 to 7.4% in 2013.

According to our most recent inflation forecasts, finalised at the end of September, Belgian inflation, as measured by the yoy growth rate of the national consumer price index, should cool from 2.8% in 2012 to 1.7% in 2013. This is mainly due to a slight decrease in the crude oil price, but also to the fact that some fiscal measures taken in 2012 will no longer affect yoy growth of consumer prices from the beginning of 2013 onwards.

STU 3-12 was finalised on 3 October 2012.

Consumptieprijzen in België en de buurlanden - Aandachtspunten voor het beleid

De prijzen van levensmiddelen in België zijn hoger dan in de buurlanden en nemen ook sneller toe. Dat is mede geconstateerd in het kader van het Europees Semester. De afgelopen jaren zijn zowel op Belgisch als internationaal niveau meerdere studies naar dat onderwerp gedaan. Daaruit blijkt dat de oorzaken velerlei zijn, maar dat er ook factoren zijn waarin België juist gunstig scoort. Vier oorzaken lijken op de voorgrond te staan. Dat zijn de kleine economisch-geografische schaal in combinatie met de tweetaligheid, de groothandelsprijzen, de loonkosten en de strategie van bepaalde winkelketens.

Short Term Update 02-12 : Special Topic - Dealing with uncertainty in macroeconomic forecasting

The new economic outlook for Belgium for the period 2012-2017 is based on a context of budget consolidation and weak economic growth for Europe. After a year 2012 marked by a mild recession, the euro area should gradually recover the path of growth. However, this growth would be modest and mixed according to country. The main risk factor for these growth forecasts lies in the sovereign debt crisis and the evolution of the financial sector in the euro area.

Despite this unfavourable context, the Belgium economy should avoid a recession in 2012 and register GDP growth equal to 1.4% in 2013. From 2014 onwards, Belgian economic growth should become more dynamic, without exceeding 2%. Export growth should amount to 3.7% on average on an annual basis over the period 2014-2017, which means that the loss of market share should persist (1.3 percentage points per year). Over the same period, domestic demand should have an annual growth rate of 1.6%, causing GDP to increase by 1.9% on average per year.

Belgian inflation should exceed largely 2% in 2012, owing to a new rise in energy prices, the depreciation of the euro against the dollar, and increases in indirect taxes, but should fall below 2% in 2013, notably thanks to lower oil prices. In the context of a moderate rise in international energy prices, Belgian inflation should stabilize at 1.8% on average during the period 2014-2017.

Total domestic employment should increase by 8 000 units this year and by 14 000 units next year. From 2014 onwards, total employment is expected to increase by 188 000 jobs over the period 2014-2017. The number of unemployed persons (broad administrative concept) should rise between 2012 and 2014 (+ 64 000 units). Over the following years, employment should grow more strongly, while the labour force continues to expand, partially due to the pension reform. As a result, the decrease in unemployment should remain limited to 33 000 units during the period 2015-2017. Finally, as measured by the Eurostat definition, which allows for international comparisons, the unemployment rate should amount to 7.3% in 2013, compared to 7.2% in 2011.

Driven by the federal government's consolidation measures and the federate bodies' ongoing budgetary consolidation, the general government's deficit should shrink to 2.6% of GDP this year (compared to 3.7% in 2011) and thus meet the objective of the Stability Programme. Without additional measures, the general government's deficit should again increase to 2.8% of GDP in 2013. In the medium term, the deficit should shrink slightly to attain 2.5% of GDP in 2017. To reach a balanced budget in 2015 (as planned by the Stability Programme), additional measures amounting to EUR 11 billion are thus necessary.

STU 2-12 was finalised on 1 June 2012.

Short Term Update 01-12 : Special Topic - Decomposition analysis of changes in CO2 emissions by the Belgian industries

Headlines Belgian economy

Since the start of 2012, tensions in money and bond markets have receded somewhat in most euro countries. Together with the recent uptick in most confidence indicators, this is expected to lead to a bottoming out of European GDP. Assuming the sovereign debt crisis does not intensify again, economic activity should gradually pick up in the second half of the year. Nonetheless, on a yearly basis, this implies negative euro area GDP growth of -0.3%, which is a substantial downward revision as compared to our September forecasts (1.2%). This scenario remains highly uncertain, with renewed turmoil in financial markets as the main risk.

Belgian economic growth amounted to 1.9% in 2011, although economic activity fell slightly during the second semester. In 2012, quarterly growth should remain very modest against the background of a gradual pick-up in the European business cycle and of the austerity measures already taken by the Belgian government. Economic activity ought to stabilize in 2012Q1, followed by a slight export-led upturn (up to qoq growth of 0.2% in 2012Q4). Economic growth should remain limited to 0.1% on a yearly basis.

Due to the lack of dynamism in the business cycle, job creation has stagnated since mid-2011 and should only slightly recover in the course of this year, leading to an average annual increase of 6 400 units in 2012. As a result, the harmonised unemployment rate (Eurostat definition) should rise from 7.2% in 2011 to 7.5% in 2012.

Our most recent inflation forecasts were finalised at the end of February. Belgian inflation, as measured by the yoy growth rate of the national consumer price index, should amount to 3.0% on average this year. This upward revision (compared to our 2.7% forecast at the end of January) is largely due to price increases for energy products as a result of higher oil prices.

STU 1-12 was finalised on 16 March 2012.

Short Term Update 04-11 : Special Topic - Relative performance of Belgian GDP since the onset of the financial crisis

Headlines Belgian economy

The European Union set up the Europe 2020 Strategy as the successor to the Lisbon Strategy to monitor and stimulate structural reform by the Member States. In the first semester of each year (the so-called European Semester), the Member States compile their Stability & Convergence and National Reform Programmes. At the turn of the semester the European Council develops policy recommendations to be implemented, preferably during the second semester. Sound performance on structural issues lays a foundation for healthy potential growth around which the business cycle oscillates.

Following the calendar of this renewed strategy, the Federal Planning Bureau decided to move the structural performance update – traditionally published in December - to the March issue and adapt the calendar of the business-cycle updates accordingly. The present December issue is, however, a one-off issue exclusively devoted to the system of innovation. Innovation has been recognised in the Europe 2020 strategy as the first of seven ‘flagships’ that should secure smart, sustainable, and inclusive growth. Innovation should have a positive impact on productivity growth and hence encourage potential GDP growth and employment. Measured in terms of R&D, not more than a few Member States achieve an innovation effort that is comparable to that of the other advanced economies of the world.

The system of innovation is an assembly of six interlinked dimensions: knowledge development by R&D; human resources; valorisation of R&D, e.g. through patents; innovation absorption capacity within and among enterprises; entrepreneurship; and financing. A good performance on each of the six is needed for a system to perform optimally. This December issue monitors the performance of Belgium on each of the dimensions. Other EU countries, the USA, and Japan serve as a benchmark. The performance seems to be mixed, so efforts are still needed to drive further improvement of the Belgian innovation system as a condition for growth and jobs.

STU 04-11 was finalised on 16 December 2011.

Concurrentie in België - Intensiteit en evolutie tegen een Europese achtergrond

Concurrentie is een complex en moeilijk meetbaar fenomeen. Nochtans is het een centraal begrip in de economie en is het belangrijk om bij te kunnen sturen als het ergens niet goed loopt. In deze studie is geprobeerd om een beeld te krijgen van de intensiteit en evolutie van concurrentie in België ten opzichte van andere Europese lidstaten. Dat is gedaan aan de hand van acht maatstaven die elk een bepaald kenmerk van concurrentie meten. Ongeveer de helft van die maatstaven heeft zich gedurende het afgelopen decennium gunstig ontwikkeld. In andere lidstaten was dat echter niet anders, waardoor de relatieve positie van België in termen van concurrentie niet verbeterd is. In twee cruciale maatstaven was de evolutie in België niet gunstig. Dat waren de prijzen, die ten opzichte van andere lidstaten sterk toenamen, en in het kielzog daarvan de prijs‐kostenmarges.

Short Term Update 03-11 : Special Topic - Product market competition: Belgium compared to other EU members

Headlines Belgian economy

Euro area economic growth slowed down substantially in 2011Q2 (0.2%), after a vigorous 0.8% in 2011Q1. The economic slack is expected to continue during the rest of this year due to the weakening in world trade growth and a major decline in consumer and business confidence. Under the assumption that financial market tensions, which are driven by worries about Europe’s sovereign debt, recede towards the end of this year (i.e., if European monetary and fiscal policy makers can restore calm), quarterly GDP growth should accelerate gradually in the course of next year. However, even then, euro area growth should not exceed 1.2% for 2012 as a whole. However, if the turmoil in financial markets persists or worsens, households and businesses could further reduce their spending and European banks could face (additional) losses on their holdings of sovereign debt. This would endanger any economic recovery.

The global economic slowdown should have a significant impact on Belgian GDP growth in the second half of this year (0.2% per quarter on average). In our baseline scenario, quarterly growth should gradually recover in the course of next year. On a yearly basis, however, this would lead to a deceleration in GDP growth from 2.4% in 2011 to 1.6% in 2012.

Domestic employment rose sharply between 2010Q1 and 2011Q1. In the second half of this year and in the course of 2012, far fewer jobs are expected to be created, owing to the economic slowdown. Backed by a favourable starting point, employment should still increase by 54 200 units on average in 2011. In 2012, net job creation should remain limited to around 30 000 units. The number of unemployed should still decrease by 23 600 units this year, but rise by 9 500 units next year. As a result, the unemployment rate (Eurostat definition) should rise from 7.3% in 2011 to 7.4% in 2012.

Our most recent inflation forecasts were finalised at the end of September. Belgian inflation, as measured by the yoy growth rate of the national consumer price index, should accelerate to 3.4% on average this year (compared to 2.2% in 2010), mainly as a result of higher crude oil prices. According to futures market quotations, oil prices should remain below their peak levels of April 2011. This should bring consumer price inflation down to 1.8% on average in 2012.

STU 3-11 was finalised on 29 September 2011.

Short Term Update 02-11 : Special Topic - What has been the damage of the financial crisis to Belgian economic activity?

The new Economic outlook for Belgium for the period 2011-2016 is based on a context that is characterised by a stronger-than-expected recovery of the world economy, spurred on in particular by the Asian emerging economies and the US economy. Three main risks could undermine this international scenario: the budgetary position of several countries and the financial risks that this may entail; the volatility of commodity prices; and the overheating of several emerging economies.

Belgian GDP growth should amount to 2.2% in 2011 and in 2012, affirming its outperformance compared to the euro area since the start of the crisis. This growth rate should persist in the medium term. In 2011 and 2012, domestic demand growth should accelerate, backed by private consumption and business investment. Public investment should be highly dynamic in the run-up to the local elections of 2012. After an impressive increase in 2010, exports are expected to increase at a slower pace in 2011 and 2012 due to the deceleration in world trade growth. From 2013 onwards, growth in domestic demand and exports should remain close to historical average rates.

Belgian inflation should accelerate considerably in 2011 (3.5%), mainly due to a steep increase in raw material prices. Without new shocks on commodity prices, inflation should stabilise around 2% in the medium term.

Belgian employment coped remarkably well with the crisis. The rise in employment in the enterprise sector in 2010 (+27 000 persons) had already compensated for the decline in 2009. This performance seems to be related mainly to the so-called temporary unemployment system and the further increase in the number of people working in the government-subsidised voucher programme for domestic-type services. From 2011 onwards, employment in the enterprise sector should increase by roughly 46 000 persons per year. The number of unemployed should decline by 8 000 units in 2011 and by 3 000 units in 2012, followed by a strengthening in the annual decline in unemployment of up to 16 000 persons in 2016. The unemployment rate (broad administrative definition) should fall from 12.6% of the labour force in 2010 to 11% at the end of the projection period.

The general government deficit amounted to 4.1% of GDP in 2010 and should shrink to 3.8% of GDP in 2011, taking into account the budget information up to mid-April. Under a constant policy assumption, the public deficit should increase significantly in 2012 (4.4% of GDP) and decline gradually from 2013 onwards to reach 3.6% of GDP in 2016. The deficit reduction path, which aims to achieve a balanced budget in 2015, requires structural consolidation measures amounting to 17 billion euro.

STU 2-11 was finalised on 1 June 2011.

Short Term Update 01-11 : Special Topic - The impact of road pricing for heavy goods vehicles

Last year, the global economic recovery after the 2009 recession turned out to be stronger than initially expected. The phasing out of stimulus measures, a deceleration of world trade growth, and public deficit reduction measures are expected to weigh on economic growth in the euro area this year. However, the German economy should continue to grow noticeably faster than the euro area average and impact positively its neighbouring countries (including Belgium). The international economic context remains highly uncertain, among other factors with regard to the future evolution of oil and other raw material prices.

In the wake of the Germany’s strong growth performance, combined with a catch-up in construction activity after the cold winter, Belgian GDP increased sharply in 2010Q2 (1.1%). The growth deceleration in 2010Q3 (0.4%) was therefore hardly surprising, all the more so because export market growth was already expected to slow down in the second semester. In the course of 2011, Belgian export growth should pick up again and domestic demand growth should strengthen, owing to investment especially. As a result, GDP growth should gradually improve from 0.5% in 2011Q1 to 0.6% in 2011Q4. On an annual basis, Belgian GDP growth is estimated at 2% both for 2010 and for 2011.

Despite the rise in labour productivity and working time, the number of jobs has been increasing again since the beginning of 2010. During the first half of this year, employment growth should weaken slightly owing to an acceleration of productivity growth, but should regain momentum thereafter. The number of employed persons is expected to increase by 28 500 on average in 2010 and by 37 600 in 2011. Considering the evolution of the labour force, the number of unemployed should fall by 4 600 on average this year. Therefore, the harmonised unemployment rate (Eurostat definition) should stabilise at 8.4%.

Measured by the yoy growth rate of the monthly consumer price index, Belgian inflation was on the rise in the course of 2010 as a result of a steady increase in commodity prices. Underlying inflation was also on an uptrend as from May 2010 and should increase further as the recent rise in commodity prices feeds into prices of other goods and services. According to our most recent inflation forecasts, finalised at the end of February, the inflation rate should increase from 2.2% in 2010 to 3.3% in 2011.

STU 01-11 was finalised on 2 March 2011.

Short Term Update 04-10 : Special topic - The Europe 2020 Strategy: economic forecasts 2010-2020

Headlines Belgian Economy

In October, the FPB prepared an update of its medium-term economic outlook of May 2010. This new outlook covers a longer period (2010-2020) than usual because it was drawn up in the framework of the macroeconomic surveillance process under the Europe 2020 Strategy, with a view to the preparation of the draft Belgian National Reform Programme.

This new outlook for Belgium is based on an international context that is marked by a recovery that should emerge in 2010-2011 and even gain momentum in the medium term. Nevertheless, the uncertainty surrounding these forecasts continues to be higher than before the financial crisis. Large budget deficits and global imbalances continue to threaten the stability of worldwide economic growth.

Yearly Belgian economic growth should amount to approximately 1.8% in 2010 and 2011 (based on our September forecast described in STU 3-10) and fluctuate around 2% thereafter. After a sharp decline in 2009, domestic demand has been expected to rise again in 2010, despite the on-going fall in business investment. As of 2011, domestic demand should rise at an average yearly rate of 1.8% as its various components regain their trend-based growth. Belgian exports, which fell by 11% in 2009, have recovered significantly in 2010. Thereafter, exports should grow at a rate close to its historical average. The contribution of net exports to GDP growth should be positive for the whole projection period (0.3-0.4 %-points on average for 2012-2020). Employment seems to have already experienced a moderate recovery in 2010.

Employment should increase further in 2011 and 2012, but at a limited pace as employers try to push up labour productivity and average working time from the historically very low levels that they reached in 2009.  From 2013 to 2015, employment growth should become more sustained before gradually dropping again towards the end of the forecast. Employment as a percentage of the population aged between 20 and 64 years should initially fall from 68% in 2008 to 66.9% in 2010, but should recover to 68.2% in 2015 and 69.8% in 2020, a rate still well below the 75% target set by the EU. Unemployment (broad
administrative definition) is expected to peak in 2012 at a level that is 103 000 units higher than in 2008. From 2013 onwards, unemployment should slowly decline and reach 591 000 units in 2020.

The general government budget deficit should shrink from 6% of GDP in 2009 to 4.8% of GDP in 2010, 4.6% in 2011 and 4.5% in 2012. Thereafter, the deficit should remain almost constant up to 2020. A  further and considerable fiscal adjustment is thus necessary to cut back the deficit to 3% of GDP in 2012 and achieve a balanced budget in 2015 in accordance with the Stability Programme of January 2010.

STU 04-10 was finalised on 22 December 2010.

Short Term Update 03-10 : Special topic - The Europe 2020 strategy for Belgium

Since mid-2009, the world economy has been recovering from one of the worst post-war economic crises. As of mid-2010, world economic growth should slow down as stimulus measures are gradually reduced or phased out and stock building becomes less of a support to economic growth. Moreover, western economies now face major challenges in restoring health to public finances. As a result, the international context remains surrounded by major uncertainties, with downside as well as upside risks.

During the second half of 2009, the Belgian economy posted positive quarterly growth rates driven by recovering exports and an acceleration of private consumption growth. In 2010Q1, the economic recovery was, however, interrupted due to a drop in construction activity owing to the cold weather. Strong GDP growth in 2010Q2 (0.9%) was in turn partly due to a catch-up by the construction sector, but exports boomed as well because of the strong growth of the German economy. In line with the international business cycle, qoq GDP growth should decelerate to 0.3% on average during the second half of 2010. In the course of 2011, export growth should pick up again, resulting in average quarterly GDP growth of 0.5% in the second half of the year. On an annual basis, GDP growth should amount to 1.8% in 2010 and 1.7% in 2011.

The past recession has had a smaller impact on domestic employment than initially expected. A temporary strong decrease in hourly labour productivity and in average hours worked per person softened the downward impact on the number of employed persons. Consequently, the net decrease in employment in 2009 was limited to 17 500 persons (-0.4%). Hourly labour productivity and average working time should catch up in the course of this year and next year. Combined with a modest economic recovery, the net increase in employment should therefore remain limited to 10 100 persons in 2010 and 4 700 in 2011. The harmonised Eurostat unemployment rate (which is based on labour force surveys) is expected to increase from 7% in 2008 to 9% in 2011.

During recent years, Belgian headline inflation (as measured by yoy growth of the national index of  consumer prices) has primarily been influenced by the evolution of raw materials prices. As from May 2010, underlying inflation has also been creeping up. In the course of the next year, underlying inflation should remain on an uptrend. Nevertheless, consumer price inflation is expected to decelerate somewhat because of the quasi-stabilisation of energy prices. On an annual basis, inflation should drop from 2.1% in 2010 to 2% in 2011.

STU 3-10 was finalised on 1 October 2010

Concurrentie in de Belgische distributie

De Belgische groot- en detailhandel presteert al enkele decennia matig in termen van productiviteitsgroei. Sinds enkele jaren stijgen ook de prijzen sneller dan in andere Europese landen. Volgens de economische literatuur zou dat matige presteren een gevolg kunnen zijn van de zware regulering waaraan de branche onderhevig is. Die regulering zou belemmerend werken voor de concurrentie, die op haar beurt te weinig stimulansen zou geven aan productiviteitsgroei. Deze Paper bestudeert het verband tussen regulering, concurrentie en productiviteit in de Belgische groot- en detailhandel. Daaruit blijkt dat er sinds 1970 inderdaad een verband lijkt te bestaan tussen de zwaarte van de regulering en de groei van de arbeidsproductiviteit.  Voor concurrentie zijn meerdere maatstaven toegepast die elk hun eigen invalshoek op het verschijnsel hebben. Hoewel die geen eenduidig beeld geven, lijkt er in de meeste gevallen toch een samenhang met de regulering te bestaan, waarbij die laatste eerder nadelig is voor concurrentie. Twee belangrijke kanttekeningen bij de studie zijn, ten eerste, dat het een verkennende analyse op basis van beperkte data is en, ten tweede, dat regulering gezien moet worden in een ruimer kader van maatschappelijke welvaart waarvan in deze studie slechts het aspect productiviteit belicht is.

Short Term Update 02-10 : Special topic : Follow-up of the wage norm in Belgium

The new medium-term outlook for Belgium is based on an international context that is marked by a stronger-than-expected recovery, particularly spurred on by the large Asian emerging economies and the American economy. Nevertheless, the uncertainty surrounding these forecasts continues to be higher than before the financial crisis. The important budget deficits and global trade and capital flow imbalances continue to threat the stability of worldwide economic growth.

The yearly growth of the Belgian economy should amount to 1.4% in 2010 and 1.7% in 2011 and exceed 2% in 2012-2015. After a sharp decline in 2009, domestic demand should start rising again in 2010, despite the ongoing fall in business investment. As of 2011, domestic demand should rise at an average yearly rate of just above 2% as its various components regain their trend-based growth. Belgian exports, which fell by 11% in 2009, are expected to recover from 2010 onwards. The contribution of net exports to GDP growth should be largely positive in 2010 (+0.7%-points) and weaken from 2011 onwards (+0.2%-points on average) due to the acceleration in domestic demand.

Belgian inflation should not exceed 2% on a yearly basis as the limited increase in nominal unit labour costs (average annual growth of 1% during the period 2010-2015) should keep underlying inflation in check. However, this limited increase masks a decline in 2010 followed by a gradual acceleration to 2% in 2015.

Employment should decline by 33 000 units in 2010 and increase by as little as 7 000 units in 2011. As economic growth accelerates in 2012-2015, employment should expand by nearly 50 000 persons per year on average. Employment as a percentage of the population aged between 20 and 64 years, should initially fall from 68% in 2008 to 66.3% in 2010 but should recover to 67.7% in 2015, a rate still far below the 75% target set by the EU. In 2012, unemployment (broad administrative definition) is expected to peak at a level that is 128 000 units higher than in 2008. From 2013 onwards, unemployment should slowly decline and reach 698 000 units in 2015.

The general government budget deficit should shrink from 5.9% of GDP in 2009 to 4.8% of GDP in 2010. However, under the assumption of constant policy, the deficit should again exceed 5% of GDP from 2011 onwards. A further and considerable fiscal adjustment is thus necessary to cut back the deficit to 3% of GDP in 2012 and achieve a balanced budget in 2015 in accordance with the Stability Programme of January 2010.

STU 2-10 was finalised on 1 June 2010.

Analyse van de macro-economische gevolgen van de organisatie van een FIFA Wereldbeker 2018 in België

In deze studie worden de mogelijke effecten van een Wereldbeker voetbal in 2018 op de economische bestedingen besproken. Die bestedingen betreffen vooral de investeringen in stadions en de toeristische uitgaven van bezoekers, maar er zijn ook effecten van de bezoekende elftallen en media en de uitgaven voor organisatie en veiligheid. In totaal zijn de bestedingen ingeschat op €1,15 miljard, verspreid over acht jaar en met een ruim betrouwbaarheidsinterval. Met behulp van twee economische modellen, nl. een input‐outputmodel en het macroeconomische model HERMES, zijn de gevolgen van die bestedingen voor de economische activiteit berekend. Het effect op het BBP zou oplopen tot ongeveer 0,13 % in 2018. Het effect op de werkgelegenheid zou bij benadering 450 tot 750 extra arbeidsplaatsen zijn gedurende de aanloopfase naar het toernooi, en een equivalent van 4 000 tot 8 000 manjaar tijdens het toernooi zelf.

In juli 2010 werd kritiek geleverd op deze studie, die echter op vele punten weerlegbaar bleek. Een korte reactie op dat commentaar vindt u hier

Short Term Update 01-10 : Special topic : The financial health of Belgian companies before the recent economic downturn

According to our February forecast, quarterly GDP growth should remain limited to 0.3% on average in the course of 2010, which is about half of the quarterly growth in the second half of 2009. This slowdown is in line with the international business cycle, which should temporarily lose momentum to the extent that monetary and budgetary stimuli fade and restocking comes to an end. In the course of 2011, exports should pick up and domestic demand should gain momentum, resulting in average quarterly GDP growth of 0.6%. On a yearly basis, Belgian GDP should increase by 1.4% in 2010 and 1.7% in 2011, after a drop of 3% last year. This means that real GDP should remain below its pre-crisis level until late 2011.

Net job losses reached 23 200 persons on average in 2009 and should add up to 46 100 this year. This trend should reverse in 2011, with a net creation of 8 600 jobs. Given the evolution of the labour force, the number of unemployed (broad administrative definition) should increase by 52 900 persons this year (after going up by 45 000 persons in 2009) and by almost 29 000 persons in 2011. As a result, the harmonised Eurostat unemployment rate (which is based on labour force surveys) is expected to reach 8.8% in 2011, compared to 7% in 2008.

Headline inflation in Belgium, as measured by yoy growth of the national index of consumer prices, was negative from May to November 2009, which was mainly due to the negative impact of energy prices. As a result, overall inflation remained just below zero in 2009. At the end of last year, the base effect of the drop in energy prices had disappeared. Combined with a gradual increase in oil prices, headline inflation should rise to 1.7% in 2010 according to our inflation forecast of March.

Short Term Update 04-09

In view of the new round of stability and convergence programmes (SCP) by the EMU member states, the FPB transmitted a medium-term outlook for the Belgian economy to the federal government. In this outlook, the short-term international assumptions are based on the November forecasts of the EC. These assumptions result in a gradual recovery of Belgian GDP in 2010 (0.8%) and 2011 (1.6%), after a decline of 3.1% in 2009. More information on this simulation can be found on pages 5-6.

As world trade appears to recover at a faster pace than expected in the EC outlook, the FPB produced a technical update of the SCP-simulation. This second simulation results in relatively stronger Belgian economic growth in 2010 and 2011 (1.1% and 1.7% respectively). From 2012 to 2014 economic growth is expected to be 2.1% on average, which might not be sufficient to close the output gap by 2014. Comments in the next paragraphs are based on this exercise.

Private demand was heavily affected by the financial and economic crisis. Private consumption suffered from a lack of confidence which brought an important increase along in the savings rate in 2009. In the medium term, consumption growth should gradually recover but remain below 2%. Gross fixed capital formation plummeted in 2009 and is unlikely to recover soon as idle production capacity is still abundant. From 2011 to 2014, average investment growth should amount to 2.1%. Exports declined by more than 10% in 2009, but should recover from 2010 onwards and reach an average growth rate of 4.4% from 2011 to 2014.

As employment typically reacts with a lag to the business cycle, the decrease in employment should even be stronger in 2010 than in 2009, before increasing gradually from 2011 onwards. The (broad administrative) unemployment rate should increase by 2.5 percentage points in 3 years and reach 14.3% in 2011. From 2012 onwards the unemployment rate should diminish somewhat, but total administrative unemployment should still amount to more than 730 000 persons in  2014 (130 000 persons more than in 2008).

Due to the recession the public deficit increased to 5.8% of GDP in 2009. Under an unchanged policy assumption the net public financing requirement should decline by 0.6% of GDP in 2010 and roughly stabilise somewhat below 5.5% in the medium term.

STU 04-09 was finalised on 21 December 2009.

De economische gevolgen van de Dienstenrichtlijn in België: een verkenning

De lidstaten van de Europese Unie moeten tegen eind december 2009 de richtlijn 2006/123/EG betreffende diensten op de interne markt omzetten. Die richtlijn is er in hoofdzaak op gericht de belemmeringen op de vrijheid van vestiging en de ontwikkeling van het dienstenverkeer tussen de landen van de Unie op te heffen. In dat kader werd aan de lidstaten gevraagd hun wetgeving te evalueren en de aspecten die in tegenspraak zijn met de bepalingen uit de richtlijn te  wijzigen.

In België werd, parallel aan dit proces, aan het Federaal Planbureau (FPB) en de Nationale Bank van België (NBB) gevraagd een studie te maken over de potentiële gevolgen van die richtlijn voor de economie. De studie stond onder toezicht van een begeleidingscomité samengesteld uit de Centrale Raad voor het Bedrijfsleven (CRB), de Nationale Arbeidsraad (NAR) en de gewestelijke Economische en Sociale Raden. Het voorliggende rapport is de synthese van dit  gezamenlijke werk.

STU 03-09 : Special topic : Measuring development progress beyond GDP

After the escalation of the financial crisis in September 2008, the industrialised countries were pulled into a deep recession. The main uncertainty that currently surrounds economic forecasts concerns the robustness of the international economic recovery. In fact, monetary and fiscal policies have been able to stabilise the world economy more rapidly than expected, but it remains difficult to predict whether the economic recovery is able to withstand the fading out of the impact of the economic stimulus measures.

According to our September forecast, Belgian GDP growth should become slightly positive in the second half of 2009. In the course of 2010, economic growth should also be supported by domestic demand. Quarterly GDP growth should pick up further in the course of 2011 and reach 0.6%. This will result in annual GDP growth rates amounting to 0.4% in 2010 and 1.9% in 2011, after a drop of 3.1% this year.

Whereas total net job creation still amounted to 71 200 persons on average last year, 34 600 jobs should be lost this year. In 2010, job losses should add up to 58 900 on average. In 2011, a net job creation of 17 600 persons on average is expected. Given the evolution of the labour force, the number of unemployed (broad administrative definition) should increase by 53 900 persons this year, by 98 400 next year and a further 23 300 persons in 2011. As a result, the harmonized Eurostat  unemployment rate (which is based on labour force surveys) is expected to reach 9.6 % in 2011, compared to 7% in 2008.

According to our inflation update of October, headline inflation (as measured by yoy growth of the national index of consumer prices) has become negative since May and should remain so until November 2009. The yoy decrease of the index results from the price evolution of a limited number of products and is temporary. Underlying inflation should cool down further as a reaction to weak economic activity and the gradual pass through of lower energy prices into the prices of other goods and services, but should remain clearly positive. This year, inflation should be zero on average, mainly due to the negative impact of energy prices. As oil prices should increase gradually, their negative impact on inflation should disappear, resulting in a rise in inflation to 1.3% in 2010, despite the decrease in underlying inflation (from 2% in 2009 to slightly above 1% in the second half of 2010).

STU 3-09 was finalised on 6 October 2009

STU 02-09 : Special Topic : The current account, market shares and competitiveness

The new medium-term economic outlook for Belgium has been drawn up in an international context that is heavily influenced by the financial crisis and the deep economic recession this has brought about. Belgian GDP should fall by nearly 4% in 2009, followed by zero growth in 2010 as the crisis subsides. In the wake of a worldwide recovery, Belgian GDP growth should start accelerating from 2011 onwards, resulting in average growth for the period 2011-2014 (2.3%) that is similar to the average of the past twenty years. Note that the global economic situation is beset with many uncertainties and, therefore, the outlook is surrounded with considerable risks, especially for the short term.

Households are expected to raise their precautionary savings dramatically in 2009, thus lowering their consumption compared to last year (-0.6%). Strongly unfavourable demand prospects, combined with a sharp drop in profitability and deteriorated external financing conditions will lead to a sharp contraction in business investment (-7.5%). Domestic demand should recover slightly in 2010 and more markedly from 2011 onwards. The volume of Belgian exports is expected to go down for two years in a row (-8.9% in 2009 and -0.6% in 2010) and the contribution of net exports to GDP growth should be largely negative. From 2011, Belgian export growth should be close to its historical growth rate (4.8%). After a peak in 2008 (4.5%), the inflation rate should fall to 0.3% on average in 2009. In the medium term, inflation is expected to pick up again, but to remain below 2%.

The effects on employment of the sudden fall in activity should materialise progressively: domestic employment should drop on average by 37 000 jobs this year and by 53 000 jobs next year. The recovery in 2011 should not be labour-intensive and employment is only expected to increase significantly from 2012 onwards (by a little more than 43 000 jobs a year on average). This evolution of employment, combined with an increase in the labour supply, should lead to a rise in unemployment of 194 000 units from 2009 to 2011. In the next three years, the unemployment rate (broad administrative definition) should go up from 11.8% to 15.2%. As from 2012, the unemployment rate should gradually decrease to reach 14.5% in 2014.

Under the assumption of constant policy, public sector accounts are expected to deteriorate markedly, with a net public financing requirement of 4.3% of GDP in 2009, widening to 5.6% of GDP in 2010. The end of the recession will not lead to a reduction in the deficit, which should peak at 6.1% of GDP in 2012 before slightly improving afterwards. As a result, Belgian public debt should again experience a snowball effect, going up from 89.3% of GDP in 2008 to 106% of GDP in 2014.

STU 2-09 was finalised on 27 May 2009

STU 01-09 : Special Topic : The crisis makes Belgian public finances vulnerable

In 2008Q4, the financial crisis and the recession faced by the main trading partners took their toll and caused Belgian GDP to fall by 1.3% qoq. According to our February forecast, Belgian economic activity should continue to contract in the course of 2009 and only stabilise in the fourth quarter. As a consequence, Belgian GDP is projected to fall by 1.9% in 2009, after an increase of 1.1% in 2008. Despite the considerable downward revision of Belgian GDP growth for 2009 (last September a positive economic growth of 1.2% was forecast), the uncertainty surrounding this forecast remains exceptionally large and downside risks are likely to be greater than upside risks.

Belgian exports should fall by 4.6% this year, after an increase of 2.2% in 2008. Imports should decrease less than exports. Despite the drop in oil prices and the appreciation of the euro, the current account balance should remain negative and reach -1.8% of GDP in 2009.

In 2008, private consumption increased by 0.9%. The negative growth of private consumption in 2009 (-0.4%) is mainly due to historically low consumer confidence and negative wealth effects caused by the drop in asset prices. This should lead to a strong rise in the households' savings rate (up to 15.8%). Worsened demand prospects, the decline in business profitability, falling capacity utilisation rates and tightened lending conditions should exert a drag on business investment in 2009, which should fall by 4.6%. Household investment growth should also turn negative in 2009 (-1.6%), although this contraction will be mitigated somewhat by a temporary VAT reduction. Only public consumption and public investment growth rates are expected to remain positive.

This year, an average (net) loss of 24 700 jobs should be registered. Job losses in the course of 2009 will be far worse than appears from the annual averages: in 2009Q4, employment should be 59 100 persons lower than in 2008Q4. The harmonised Eurostat unemployment rate (which is based on labour force surveys) is expected to reach 8.2% in 2009, compared to 7.1% in 2008.

Despite high underlying inflation during the first half of 2009, total inflation, as measured by the yoy increase in the national index of consumer prices, should continue to decrease and even become slightly negative during summer. Only in the second half of this year should the expected oil price increase be reflected in inflation evolution. According to our inflation update of March, average inflation should decline from 4.5% in 2008 to 0.5% in 2009.

STU 1-09 was finalised on 2 March 2009.

STU 04-08 : Special Topic : The Belgian financial system at the onset of the crisis

The FPB has revised its medium-term outlook for 2008-2013 for the Belgian economy. For the 2008-2010 period, the outlook adopts the international economic scenario provided by the OECD outlook of November 2008. The uncertainty surrounding the results is exceptionally large and downside risks could prove to be greater than upside risks. The greatest downside risks include a longer than expected period of distress on financial markets, and that emerging markets could be hit harder than anticipated.

The outlook for Belgium shows average GDP growth reaching only 1.5% during the period 2008-2013 (1.9% for the period 2001-2007). This relatively weak performance is largely explained by weak GDP growth in 2008 (1.4%), a fall in economic growth next year (-0.3%) and a limited recovery in 2010. Over the period 2011-2013, GDP growth is expected to stabilise at a rate slightly above 2%, which might not allow the output gap to be completely closed by the end of the projection.

After dynamic growth in 2007, private consumption expansion should be much more limited in 2008 and 2009. From 2010 onwards, household demand growth should increase gradually and then stabilise at a rate close to 2%. After dynamic growth in 2008, gross fixed capital formation should slightly decrease in 2009, before recovering in 2010 and increasing by 2.4% on average during the 2011-2013 period. Given the unfavourable international environment next year, exports are expected to decrease in 2009. Over the period 2010-2013, exports should increase by 4.4% on average and the contribution of net exports to GDP growth is expected to be slightly positive.

The worsening of the economic situation should lead to a decrease in employment in 2009. In the medium term, employment should increase again, at a yearly rate reaching 0.8% at the end of the projection. With employment growth heavily affected by the adverse economic situation in the short run and in view of the increase in the labour force, the unemployment rate (broad definition) will soar to 12.9% by 2010 (against 11.9% in 2008), before levelling off at around 13.2% from 2011 onwards. Total administrative unemployment should stand at almost 700,000 persons in 2013 (65,000 persons more than in 2007).

Under the assumption of unchanged policy, the public accounts are expected to deteriorate markedly, with a net public financing requirement of 1.6% of GDP in 2009, 2.4% in 2010 and up to 2.6% in 2011-2013.

STU 04-08 was finalised on 11 December 2008.

STU 03-08 : Special topic : Financial crisis: causes and initial consequences

Since mid-September, the financial crisis has entered an exceptionally turbulent new phase. The US and European authorities have had to take extraordinary measures in order to deal with solvency and liquidity problems in the banking sector. As financial conditions are likely to remain difficult, it is obvious that the crisis will have large negative effects on the world economy, although the size of these effects is currently very difficult to grasp due to huge uncertainties concerning the magnitude and the duration of the crisis.

This uncertainty explains the volatility of most indicators, which makes it currently very difficult to establish credible economic forecasts. The latest short-term forecasts of the FPB were finalised in the first half of September, i.e. before the aggravation of the financial turbulence. According to these forecasts, Belgian GDP growth should amount to 1.6% in 2008 and slow down to 1.2% in 2009. The 2009 government budget is based on this outlook.

In the light of recent financial sector developments, the latest FPB forecasts should be revised downwards, in line with revisions of economic growth by national and international institutions. In fact, the weakening of economic growth in the course of 2008 will probably be stronger than expected, while the subsequent recovery could take longer to materialise and could lack strength. The channels through which the financial crisis is affecting the real economy are discussed in the Special Topic of this Short Term Update.

Belgian business and consumer confidence have dropped to their lowest level in more than five years due to weakening economic growth and the financial crisis, which are tending to reinforce one another. Moreover, consumer confidence has suffered from the high number of lay-offs in large Belgian companies. On the other hand, the decline in oil prices and the depreciation of the euro have limited the worsening of sentiment somewhat through their positive effect on households’ purchasing power and export competitiveness.

Inflation forecasts for 2009 have been revised downwards since September, which is the result of two counteracting factors. In fact, the downward effect of falling oil prices on inflation is partly compensated by the stronger than expected increase in underlying inflation. According to our end-of-October inflation update, the increase in the national index of consumer prices should slow down from 4.6% in 2008 to 1.9% in 2009.

STU 3-08 was finalised on 31 October 2008.

STU 02-08 : Special topic : Long-Term Projections of Freight Transport and its Environmental Impact

The medium-term outlook for Belgium points towards an average GDP growth rate of 2% for the period 2008-2013. A slowdown is expected for the Belgian economy in 2008 and 2009 (GDP growth of only 1.7%), mainly as a consequence of less dynamic exports and a moderate increase in domestic demand. Belgian GDP growth should accelerate in 2010, thanks to the more favourable international environment and a more dynamic development of domestic demand. From 2011 onwards, Belgian GDP growth should stabilise slightly above its potential (equal to 2% on average). Note that the global economic situation is beset with many uncertainties and, therefore, the outlook is surrounded with considerable risks, especially for the short term.

The average yearly growth rate for private consumption should reach 1.7% for the period 2008-2013, which is slightly lower than the increase in households’ real disposable income. Purchasing power will be handicapped in 2008 by the high inflation rate (3.8%), but should be underpinned afterwards by employment growth and by higher increases in wage rates and social benefits. Investment growth should reach 2.8% for the period 2008-2013, reflecting the path of business investment growth (supported by business profitability and stable demand prospects after 2009). Growth in exports should reach 5% on average and the contribution of net exports to GDP growth is expected to be 0.1%-points. After an acceleration in 2008, the inflation rate should stabilise slightly below 2% for the period 2009-2013. This rather low inflation rate is mainly due to a moderate increase in imported costs and the persistence of a negative output gap until 2013.

The expected evolution of employment reflects a relatively favourable macroeconomic environment and persistently modest labour productivity growth (1.2% per year). After a particularly high number of new jobs created in 2007 (70,000), employment growth should remain sustained: about 42,000 units should be created every year during the period 2008-2013. Between 2007 and 2013, manufacturing industrial employment should fall by 35,000 but the number of jobs created in market services should exceed 270,000. Nevertheless, in view of the increase in the labour force (notably explained by incoming migration), the fall in unemployment should be limited to 22,000 persons. The unemployment rate (broad administrative statistics) should fall from 12.6% in 2007 to 11.6% in 2013.

Under the assumption of constant policy, public accounts are expected to deteriorate markedly, with a net public financing requirement of 0.3% of GDP in 2008, widening to 0.8% of GDP in 2009 and 0.9% of GDP in 2010, before gradually falling to 0.4% by the end of the projection period. Nevertheless, the total public debt to GDP ratio will continue to decline, from 84.8% in 2007 to 70.8% in 2013. [STU 2-08 was finalised on 26 May 2008]

STU 01-08 : Special Topic : Are Belgian price stability and purchasing power at stake?

In line with the international business cycle, qoq GDP growth in Belgium slightly decelerated from 0.7% in the first quarter to 0.5% in the third and the fourth quarter. This year, quarterly growth should be between 0.4% and 0.5%. On a yearly basis, economic growth should slow down from 2.7% in 2007 to 1.9% in 2008. In 2007, the Belgian economy was driven by domestic demand. This year, domestic demand growth should decline markedly. Private consumption growth is expected to weaken as the slowdown in job creation, the more modest increase in wages before indexation, and the acceleration in inflation should all limit the growth of real disposable income. This will also affect housing investment, together with the increased mortgage rates. Business investment growth should also slow down in view of less favourable demand perspectives.

Export growth should be almost as strong in 2008 as in 2007 despite a slowdown in the growth of the relevant export markets. As a consequence, Belgian exports will keep on losing export market shares, but to a lesser extent. The combination of real import growth exceeding export growth and deteriorating terms of trade should reduce the Belgian current account surplus to 2.5% of GDP in 2008 as compared to 2.9% last year.

After a net gain of about 68,000 persons in 2007, employment is expected to record an average increase of 46,600 persons this year. As employment will increase faster than the labour force, the broad administrative unemployment rate is expected to decline from 12.7% in 2007 to 12.2% in 2008. The harmonised Eurostat unemployment rate (based on labour force surveys) should fall from 7.6% last year to 7.3% in 2008.

According to our inflation update of March, the increase in the national index of consumer prices should accelerate to 3.5%, after 1.8% in 2007. This acceleration is mainly due to substantial price increases in energy products and in processed food items (especially cereal and milk products). [STU 1-08 was finalised on 7 March 2008]

STU 04-07 : Special Topic : Why the medium-low paid benefit less from gross wage increases than the better paid

On the basis of its short term economic forecast of September and revised figures for the medium-term international economic environment, the FPB has updated its medium-term outlook 2007-2012. GDP growth should reach 2.1% on average and should be driven by both domestic demand and exports, although the structural loss of export market shares should remain significant: while growth in our potential export markets will reach 6.8% a year on average, exports are expected to record an average annual increase of 5.4%.

The growth of private consumption (1.8% on average) should be in line with the growth of real disposable income (1.9% on average). Gross fixed capital formation should continue to register sustained growth, attaining an average of 3.1%, mainly reflecting an increase in business investment, but also an acceleration of public investment in view of the local elections of 2012. Inflation (as measured by private consumption deflator growth) should be below 2% on average during the projection period, despite an acceleration in 2008: inflation could even climb to 2.5% next year, according to the latest update of the monthly inflation forecasts of FPB. Limited wage increases (lower than productivity gains), the increase in interest rates, a negative output gap and a moderate increase in imported costs are the main factors accounting for the low inflation rate in the medium term.

Total employment will increase by more than 40,000 jobs a year on average during the projection period, due to sustained economic growth combined with persistently modest labour productivity (1.4% per year). Due to ongoing structural shifts in the sectoral composition of employment, the manufacturing industry will incur a further loss of 6,000 jobs a year on average, whereas market services should gain 46,000 jobs a year. The employment rate is expected to increase from 62.6% in 2006 to 65.4% in 2012; the fall in the unemployment rate (from 13.8% in 2006 to 11.0% in 2012 -broad definition) should accelerate at the end of the projection period, when baby-boomers will leave the labour force on a massive scale.

The pace of employment growth should have nearly doubled during the period 2001-2012 compared with the previous decade, despite very similar average economic growth rates for both periods.

STU 04-07 was finalised on 10 December 2007.

STU 03-07 : Special Topic : Regional labour market dynamics in Belgium

This year, the Belgian economy should register an increase in GDP of 2.7%. In 2008, economic growth is expected to slow down to 2.1%.

In 2006, Belgian exports grew significantly slower than the relevant export markets. Belgian exporters thus suffered from important losses of market share.  Despite a steady deceleration of growth in the relevant export markets this year and next year, export growth should accelerate somewhat. Consequently, losses of export market shares should be more in line with their historical trend. The current account balance has worsened since 2003 due to the continued rise in oil prices. In 2007 and 2008, the slower increase in oil prices and the appreciation of the euro should limit the decline of the current account balance to 0.1% of GDP per year.

Domestic demand growth, which is mainly determined by the evolution of private consumption and business investment, should amount to 3.2% this year and 2% next year. In 2007, private consumption will benefit from a strong rise in employment and in property income, while business investment will be stimulated by the high capacity utilisation rate and the ongoing rise in profitability. Next year, private consumption growth should decelerate due to a smaller rise in real disposable income and less favourable demand prospects should weigh on business investment. Domestic employment should increase by, on average, 61,300 persons in 2007 and 44,200 persons in 2008. As the number of jobs is growing faster than the labour force, broad administrative unemployment is expected to decrease by 57,800 persons this year and 20,400 persons next year. The harmonised Eurostat unemployment rate (which is calculated by means of labour force surveys) is expected to fall from 8.2% in 2006 to 7.2% in 2008.

The evolution of inflation, as measured by the national index of consumer prices, is strongly influenced by the evolution of natural gas prices, which should decline in 2007 and rise substantially in 2008. Consequently, inflation should amount to 1.7% this year and 2.2% next year.

STU 3-07 was finalised on 5 October 2007.

STU 02-07 : Special Topic : Generating medium-term budget surpluses to finance the budgetary cost of ageing

The medium-term outlook for Belgium points towards an average GDP growth rate of 2.1% during the period 2007-2012, which is slightly higher than the potential rate (2.0%) and similar to the average growth rate of the euro area. This pace of growth follows a strong rebound in 2006 (3.0%), mainly driven by domestic demand, in a context of an improvement in international economic activity.

The average yearly growth rate for private consumption should reach 1.8% during the period 2007-2012, which is slightly lower than the increase in households’ disposable income. Purchasing power will especially be underpinned by employment growth in 2007 and 2008 and by higher increases in wages and social benefits at the end of the projection period. Investment growth should reach 2.7% during the period 2007-2012, reflecting the path of business investment growth (supported by high business profitability and stable demand prospects), but also an acceleration in public investment at the end of the projection period. Growth in exports should reach 5.7% on average and the contribution of net exports to GDP growth should amount to 0.2%-points. The external surplus, which was strongly reduced between 2002 and 2005, should (slowly) increase from 2007 onwards and attain 3.1% of GDP in 2012. The combination of moderate increases in domestic costs and limited rises in imported costs should allow the inflation rate to remain below 2% in the medium term.

The expected evolution of employment reflects a favourable macroeconomic context, limited wage increases (mainly at the start of the period) and various measures taken to promote employment. After a particularly high number of new jobs created in 2006 (44,000), employment growth should remain sustained: about 38,000 units should be created every year during the period 2007-2012. Between 2006 and 2012, manufacturing industrial employment should fall by 41,000 units but the number of jobs created in market services should exceed 256,000. As the number of newly created jobs is growing faster than the labour force, the unemployment rate (broad administrative statistics) should fall from 13.9% in 2006 to 12.0% in 2012.

Under the assumption of constant policy, public accounts are expected to present a net public financing surplus in 2007 (+0.1% of GDP) and to deteriorate in 2008 (-0.5% of GDP). During the following years, the net public financing requirement should gradually decline and the equilibrium should be restored at the end of the projection period, mainly thanks to a decrease in interest charges on the public debt. Consequently, the total public debt to GDP ratio is expected to decline from 87.5% in 2006 to 69.5% in 2012.

STU 2-07 was finalised on 18 May 2007.

STU 01-07 : Special Topic : An accuracy assessment of FPB’s medium-term projections

In the course of 2006, quarterly economic growth in Belgium slowed down in line with the international business cycle from 0.9% in the first quarter to 0.6% in the last quarter. This year, qoq GDP growth should stabilise around 0.5%. On a yearly basis, economic growth should slow down from 3% in 2006 to 2.2% in 2007.

In 2006, economic growth was only supported by domestic demand while net exports contributed negatively to it. In 2007, however, both domestic demand and net exports should support GDP growth. Despite the deceleration in quarterly Belgian export growth due to the slowdown of the euro area and the US economy, annual average export growth should rise to 6.5% in 2007 as it benefits from a considerable carry-over from 2006. After several years of decrease, the current account surplus should rise by 0.4% of GDP in 2007, mainly as a result of the decline in oil prices leading to an improvement in the terms of trade. Domestic demand growth should weaken this year, which is essentially due to the evolution of private consumption and public investment. Private consumption growth should be less buoyant than in 2006 as the personal income tax reform then gave its final boost to real disposable income. Public investment rose markedly last year in view of the local elections in October 2006, but should fall by the same extent in 2007.

After a net gain of about 44,000 persons in 2006, employment is expected to record an average annual rise of 45,600 persons this year. As the number of jobs grows faster than the labour force, the broad administrative unemployment rate is expected to decline from 13.9% in 2006 to 13.5% in 2007. The harmonised Eurostat unemployment rate (based on labour force surveys) should fall from 8.3% in 2006 to 7.9% next year.

This year, the increase in the national index of consumer prices (NICP) should amount to 1.8%, just as in 2006. It should be noted that the inflation picture in 2006 was blurred by the introduction of a new NICP-basket. The rise of the private consumption deflator, which is not affected by this factor, should decline from 2.3% in 2006 to 1.8% in 2007, mainly due to the decrease in oil prices.

STU 04-06 : Special Topic : Promoting an innovative economy: the Belgian National Reform Programme

In the October update of the FPB medium-term outlook for Belgium, GDP growth reaches an average of 2.3% for the 2006-2011 period. This development will be driven by both domestic demand and exports, although the contribution of net exports to economic growth is expected to be limited. The growth of private consumption (1.9% on average) should be in line with the growth of household disposable income in real terms (2% on average). Gross fixed capital formation should grow by 2.7% (on average). The structural loss of export market shares should remain significant, with exports increasing by 5.5% a year on average, compared with a 6.8% growth in our potential export markets.

After climbing to 2.4% in 2006 because of high energy prices, inflation (as measured by the private consumption deflator) should fall below 2% in the medium term, mainly because of limited wage growth, the increase in interest rates and moderate rises in prices of imports (notably owing to the decrease in oil prices). Total employment is expected to increase by about 38,500 jobs a year during the 2006-2011 period, despite new job losses in manufacturing. The factors behind this performance are: a relatively favourable macroeconomic context, limited wage increases, a further small reduction in working time and various measures taken to promote employment. Nevertheless, the fall in the unemployment rate is expected to be limited due to the substantial rise in the labour force. However, at the end of the projection period - when baby-boomers will leave the labour force on a massive scale - the growth of the labour force should lose momentum, allowing the decrease in the unemployment rate to accelerate.

All in all, economic growth should be stronger for the next six years compared to the previous six years, leading to the same average GDP growth rate during the period 2000-2011 as during the period 1990-1999. At the same time, the pace of employment growth should have nearly doubled (yearly 35,000 on average during the same period 2000-2011, against slightly less than 20,000 yearly during the former decade), reflecting a considerable decline in productivity gains.

This medium term outlook does not take into account the measures taken within the framework of the 2007 budget.

STU 4-06 was finalised on 11 December 2006.

STU 03-06 : Special Topic : Simulating the impact of the pension bonus on the financial implications of working longer

HEADLINES BELGIAN ECONOMY - OCTOBER 2006

This year, the Belgian economy should register a GDP growth of 2.7%. In 2007, economic growth should slow down to 2.2%.

In line with the international economic situation, Belgian export growth should strengthen to 5.4% this year and decrease to 4.9% in 2007. The current account surplus should hardly change. In 2006 this is due to the sharp increase in oil prices, which leads to a deterioration in the terms of trade, whereas in 2007 imports and exports should increase to the same extent, while the terms of trade stabilise.

Domestic demand should grow at a slower pace as business investment growth weakens somewhat after last year’s substantial catching-up. This is partially compensated for by a strengthening of public expenditure and especially by private consumption. Private consumption growth should accelerate to 2.3% in 2006 and 2% in 2007 (from 1.1% in 2005), thanks to the increase in households’ real disposable income and (at least in 2006) a further drop in the household savings ratio. Domestic employment should increase by on average 41,000 units in 2006 and 45,600 units in 2007. As the number of jobs is growing faster than the labour force, the unemployment rate (large administrative definition) is expected to diminish from 14.3% in 2005 to 13.7% in 2007. Nevertheless, the harmonised Eurostat unemployment rate (based on labour force surveys) should still increase from 8.4% in 2005 to 8.6% in 2006, only to drop to 8.3% next year.

Headline inflation, as measured by the national index of consumer prices (NICP), should amount to 1.9% in 2006 and 2007 (after 2.8% in 2005). This year, the inflation picture is blurred by the introduction of a new NICP-basket based on the household budget survey of 2004. Measured by the deflator of private consumption, which is not affected by this technical factor, inflation should only drop to 2.4% in 2006 and ease further to 1.9% in 2007. The steady decline in inflation mainly results from the moderate wage cost increase, the appreciation of the euro and the stabilisation of oil prices expected in the course of 2007.

Network Industry Reform in Belgium: Macroeconometric versus General-Equilibrium Analyses

In network industries the market reform that is being pursued by national and supranational authorities should lead to an improvement of efficiency, which spills over into a beneficial macroeconomic impact. This paper presents two alternative simulations of the potential impact in Belgium. These simulations give very different outcomes, but are still complementary. A macroeconometric approach seems to be more realistic in the short and mid term because it has been built up from observed behavioural relationships. A general-equilibrium approach gives rise to drawing some lessons about the conditions that make the impact more pronounced in the long term.

Economisch structuurbeleid: de Lissabonagenda

Het planning paper 101 “Economisch structuurbeleid: de Lissabonagenda » wil de micro-economische dimensie van de Lissabon strategie analyseren. Het is de bedoeling de theoretische grondslagen van die pijler te verduidelijken, evenals de ontwikkeling van de opvattingen bij de uitvoering van dit gedeelte van de strategie en van de noodzakelijke coördinatie met de twee andere pijlers van de strategie, en de resultaten, zowel op het niveau van de Unie als geheel als op het Belgische niveau. Daartoe wordt ook de herziene strategie van Lissabon besproken die werd goedgekeurd op de Europese Raad van Brussel in maart 2005 en de actie toespitst op een partnerschap voor groei en werkgelegenheid.

Hervorming van netwerkindustrieën in België: de macro-economische effecten

STU 02-06 : Special Topic - Decomposition analysis of changes in CO2 emissions by the Belgian industries

HEADLINES BELGIAN ECONOMY - MAY 2006

The medium-term outlook for Belgium points towards an average GDP growth rate of 2.2% during the 2006-2011 period, which is slightly higher than potential (2.0%). This pace of growth should follow a slowdown in economic growth in 2005 (1.5%) and a rebound in 2006 (2.4%). Economic growth in Belgium should remain slightly higher than in the euro area, on average.

Despite moderate wage increases, the average yearly growth rate for private consumption should reach 1.8% during the 2006-2011 period, in particular because of the increase in household disposable income (stimulated especially by reductions in personal income tax and increases in employment and social benefits). Investment growth should reach 2.5% during the 2006-2011 period, mainly reflecting the path of business investment growth, but also an acceleration in public investment at the end of the projection period. Growth in exports should be 5.4% on average and the contribution of net exports to GDP growth is expected to be 0.3%-points. The external surplus, which was strongly reduced between 2002 and 2005, should increase again after 2007 and attain 3.2% of GDP in 2011 (partly as a result of the improvement of the terms of trade). Limited increases in wage costs, the decline in oil prices after 2007 and a negative output gap until the end of the projection period, should allow the inflation rate to remain below 2% in the medium term.

The expected evolution of employment reflects a favourable macroeconomic context, a limited increase in wage costs and various policy measures. After the net creation of approximately 39,000 and 41,000 jobs in 2005 and 2006 respectively, about 35,000 jobs should be created every year during the 2007-2011 period. Between 2005 and 2011, industrial employment should fall by 30,000 persons, but the number of jobs created in market services should exceed 250,000. Nevertheless, in view of the strong increase in the labour force (mainly in the 50-64 age class) the fall in unemployment will be limited to 38,000 persons. The unemployment rate (broad administrative statistics) should fall from 14.3% in 2005 to 13.1% in 2011.

Under the assumption of constant policy, public accounts are expected to deteriorate markedly, with a net public financing requirement of 0.3% of GDP appearing in 2006, widening to 1.2% in 2007, before gradually falling to 0.3% by the end of the projection period. Nevertheless, the total public debt to GDP ratio is still expected to decline from 93.9% in 2005 to 78.0% in 2011.

Reforming network industries: experiences in Europe and Belgium / Highlights of conference “The Lisbon strategy: a motor for market reforms of the network industries”

STU 01-06 : Special Topic - Fiscal Councils, independent forecasts and the budgetary process

HEADLINES BELGIAN ECONOMY - MARCH 2006

In the wake of the economic recovery in Europe, Belgian GDP growth rose gradually from 0.1% in the first quarter to 0.6% in the last quarter of 2005. Quarterly growth should stabilise at 0.6% during the first half of 2006 and remain higher than 0.5% during the second half of the year. On a yearly basis, GDP growth should strengthen from 1.5% last year to 2.2% in 2006.

This year, net exports as well as domestic demand should contribute positively to economic growth. Due to the European recovery, Belgian export growth will strengthen to 4.7%. The current account surplus, however, will increase very little as a result of the high oil prices, which will lead to a negative evolution in the terms of trade. Domestic demand will grow at a slower pace as business investment will weaken somewhat after a significant catch-up and some exceptional purchases in 2005. This slow-down will be partially compensated for by stronger public expenditure – in consumption and investment – as well as stronger private consumption. Consumer expenditure should accelerate to 1.6% as household disposable income is underpinned by employment growth and personal income tax cuts.

After a net gain of 38,600 persons last year, employment is expected to record an average annual rise of 41,100 persons in 2006. The number of jobs is growing faster than the labour force, which should slightly reduce the unemployment rate (broad administrative statistics) from 14.3% last year to 14.1% in 2006. The ‘harmonised’ unemployment rate (Eurostat definition) should decline from 8.4% last year to 8.3% in 2006.

Inflation should fall markedly in 2006 compared to 2005 due to a limited rise in unit wage costs and the fading of the effects of higher oil prices. The inflation picture is somewhat blurred by the persistent deterioration in the terms of trade and by the introduction of a new price index. The private consump-tion deflator should increase by 2.3%, the GDP deflator by 1.9% and the national index of consumer prices by 1.8%.

Prijsregulering in België - met een toepassing op de sectoren van OTC-geneesmiddelen en rusthuizen

Markteconomen hebben aangetoond dat indien aan bepaalde voorwaarden wordt voldaan het model van volkomen en vrije mededinging kan leiden tot optimale allocatieve efficiëntie, waardoor de collectieve welvaart wordt gemaximaliseerd. Indien niet aan alle technische voorwaarden wordt voldaan, wordt gesproken van marktfalen. Dit marktfalen noopt op één of andere manier tot overheidsingrijpen.

STU 04-05 : Special Topic - Transdisciplinarity and the governance of sustainable development

HEADLINES BELGIAN ECONOMY - DECEMBER 2005

The latest update of the FPB medium-term outlook for Belgium shows an average GDP growth reaching 2.1% during the 2005-2010 period. This development can be largely accounted for by both domestic demand and exports, although the contribution of net exports to economic growth is expected to be limited; the current account should continue to decrease until 2006 due to terms of trade losses. Private consumption should grow at a moderate pace during the projection period (1.7% on average), in line with growth of households’ disposable income in real terms. At the same time, gross fixed capital formation (and particularly business investment) should grow at a sustained pace with annual growth reaching 2.9% on average. The structural loss of export market share should be important, with exports increasing by 5% a year on average, compared with a 6.5% growth of our potential export markets.

Inflation should reach 2.2% on average during the projection period, due to figures close to 3% in 2005 and 2006. The current acceleration is explained by high energy prices and the recent depreciation of the euro against the dollar. However, inflation should be around 2% in 2007 and fall below 2% at the end of the projection period, mainly because of limited wage increases and moderate rises in imported costs. Employment is expected to increase by about 33,000 jobs a year during the 2005-2010 period. This performance can be explained by several factors: a relatively favourable macroeconomic context, limited wage increases, a - although very slow - reduction in working time and various measures taken to promote employment. Nevertheless, the fall in the unemployment rate should be very limited due to a considerable increase in the working population.

The FPB October update of the medium term outlook for Belgium does not yet take into account the measures taken within the framework of the 2006 budget.

STU 03-05 : Special Topic - Impacts of tax shifting operations

Due to a deceleration in the worldwide business cycle, Belgian economic growth weakened from the fourth quarter of 2004 onwards. Although the high level of oil prices remains an important factor of uncertainty, economic activity should gain momentum during the second half of this year. As a result, GDP growth should fall from 2.6% last year to 1.4% in 2005 and to 2.2% in 2006.

This year, net exports as well as domestic demand should contribute less to economic growth than in 2004. While Belgian exports suffer from the slowdown in European economic growth, domestic demand is hampered by the poor performance of private and public consumption that is only partially compensated for by an acceleration in investment growth.

Economic growth in 2006 will mainly depend on domestic demand. Private consumption growth should increase as disposable income is boosted by the personal income tax reform and investment growth should remain strong. Combined with robust export growth, this implies an acceleration of imports, resulting in a zero contribution of net exports to economic growth.

After a net gain of 23,600 persons last year, employment is expected to record an average annual rise of 28,800 and 30,300 persons in 2005 and 2006 respectively. The unemployment rate should remain stable this year and next year.

The rise in oil prices has pushed up underlying inflation since the beginning of this year. Together with price increases in oil-related products, this should raise headline inflation from 2.1% in 2004 to 3% in 2005 and 2.9% in 2006.

Markthervorming in netwerkindustrieën in België

Hervorming van de posterijen in België. Lessen uit Zweden en Nederland

Deze nota maakt deel uit van een serie van drie waarin een internationale benchmarking van markthervormingen in enkele Europese netwerkindustrieën gedaan wordt (elektriciteit, spoorwegen en posterijen). Het doel van die benchmarking is om waar mogelijk lessen te trekken voor de hervorming van de betreffende sectoren in België. De hervormingen zijn het gevolg van het Europese streven naar de vorming van een interne markt met zoveel mogelijk vrije concurrentie. Bovendien vloeien die hervormingen voort uit de overtuiging dat vrije concurrentie een efficiënter marktuitkomst kan garanderen dan staatsinterventie. Voor de posterijen gaat de aandacht in het bijzonder uit naar Nederland en Zweden. Die twee landen lopen met hun posthervorming duidelijk voor op andere Europese landen.

Hervorming van netwerkindustrieën: theoretisch kader

Netwerkindustrieën hebben kenmerken die een optimale marktwerking in de weg kunnen staan. Het meest in het oog springend is de infrastructuur die doorgaans hoge investeringen vraagt, waardoor het niet altijd mogelijk is om meerdere concurrerende netwerken naast elkaar te hebben. Hierdoor komt die infrastructuur in een monopoliepositie, met alle economische gevolgen van dien. Ook externaliteiten spelen een rol: de marktdeelnemers nemen bepaalde kenmerken van het netwerk niet op in hun waardering. Hierdoor kan het gebeuren dat de prijzen en geproduceerde hoeveelheden vanuit maatschappelijk oogpunt niet optimaal zijn. Bovendien produceren netwerkindustrieën diensten van algemeen belang. Hierdoor is het nodig dat toegankelijkheid, efficiëntie en betaalbare prijzen gewaarborgd worden. Gegeven deze combinatie van kenmerken is het wenselijk dat er een zekere vorm van marktregulering is.

STU 02-05 : Special Topic - Market reform in network industries in Belgium

The medium-term outlook for Belgium (cut-off date: April 30) points towards an average GDP growth rate of 2.2% during the 2005-2010 period, which is slightly higher than potential (2.1%). This pace of growth is expected to take place after a slowdown in economic growth in 2005 (1.7%) and a rebound in 2006 (2.6%). In both years Belgian economic growth should be slightly higher than in the euro area. Recent information makes the 2005 growth figure highly uncertain, with a significant downward risk.

Despite moderate wage increases, the average yearly growth rate of private consumption should reach 1.9% during the 2005-2010 period, particularly thanks to the increase in households’ disposable income (stimulated particularly by reductions in personal income tax and the rise in employment). Investment growth should reach 3% on average during the 2005-2010 period, mainly reflecting the increase in business investment but also an acceleration of public investment in 2005 and 2006. Growth in exports should be 5.5% on average and the contribution of net exports to GDP growth is expected to be 0.2%. Limited wage cost increases, lower oil prices as compared to the average level in 2005 and a negative output gap should allow inflation to remain around 1.8% in the medium term.

The development of employment should reflect the favourable macroeconomic context, the limited increases in wage costs and various policy measures. After the net creation of approximately 29,000 and 21,000 jobs in 2004 and 2005 respectively, about 40,000 jobs should be created every year during the 2006-2010 period. Between 2004 and 2010 industrial employment should fall by 51,000 persons and the number of jobs created in market services should exceed 270,000. Nevertheless, in view of the growth in the labour force (mainly in the 50-64 age group) the fall in unemployment will be limited to 50,000. The unemployment rate (broad administrative statistics) is still increasing in 2005 (from 14.4% to 14.6%), but it will subsequently fall to 12.9% in 2010.

Under the assumption of unchanged policy, the public accounts are expected to show a clear deterioration, with a net public sector borrowing requirement appearing in 2005 (0.5% of GDP) and widening to 1.5% of GDP in 2006 before gradually declining to 0.7% of GDP by the end of the projection period. Nevertheless, the total public debt to GDP ratio is still in decline, from 95.8% in 2004 to 82.6% in 2010.

STU 01-05 : Special Topic - Why is Belgian productivity growth declining?

In 2004, economic growth in Belgium amounted to 2.7% (GDP at constant prices), which is higher than the euro area average due to the strength of Belgian domestic demand. The economic recovery, triggered by an improvement in the international business climate from mid-2003 onwards, resulted in quarter-on-quarter growth rates between 0.7% and 0.8%, but weakened to 0.4% in the last quarter of 2004.

Economic growth should gain momentum during the course of this year, which is mainly due to the quarterly profile of exports. In fact, export growth should temporarily weaken during the first half of this year due to lower foreign demand growth and the appreciation of the euro during the last two quarters of 2004, which hampers competitiveness with respect to the other currency areas. Private con-sumption (+1.8%) should increase at a faster pace than purchasing power (+1.4%) for the third con-secutive year. Stimulated by the ongoing recovery of business profitability, low interest rates and gradually improving demand prospects, real business investment growth should strengthen to 3.3% this year. All in all, GDP growth at constant prices should reach 2.2% in 2005. Inflation should re-main rather stable at 2.0%.

Employment should increase by 34,400 units this year, as compared to 28,600 in 2004. As the labour force should increase at about the same pace in 2005, the unemployment rate should stabilise this year. The employment rate should rise slightly from 61.8% in 2004 to 62.1% in 2005.

STU 04-04 : Special Topic - Geographic market specialisation and export performance

The latest update of the FPB’s medium-term outlook for Belgium shows average GDP growth reaching 2.3% during the 2004-2009 period. This development can be largely accounted for by domestic demand, whereas the role of (net) exports is expected to be more limited. As in 2003, private consumption should evolve in quite a dynamic way during the projection period (1.9% on average), mainly as a result of an expansion of households’ disposable income. At the same time, gross fixed capital formation (and particularly business investment) should recover, with annual growth reaching 3%. The structural loss of export market share should be confirmed with exports increasing by 5.3% a year on average, compared with growth of 6.3% of our potential export markets.

Inflation should remain slightly below 2% in the medium term, mainly thanks to limited wage increases and moderate rises in imported costs. Employment is expected to increase by about 32,000 jobs a year during the 2005-2009 period. This performance can be explained by several factors: a relatively favourable macroeconomic context, limited wage increases, a reduction in working time and various measures taken to promote employment. At the same time, the working population should rise considerably. As a consequence, despite the creation of many jobs, the fall in the unemployment rate should be very limited.

The FPB’s October update of the medium term outlook for Belgium does not yet take into account the measures decided within the framework of the 2005 budget.

STU 03-04 : Special Topic - The effects of an oil price shock on the Belgian economy and public finances

The recovery of Belgian GDP started by mid-2003, driven by an improvement of the worldwide business cycle, which persisted during the first half of this year. As a result, GDP growth should accelerate to 2.4% in 2004 and 2.5% in 2005, after a modest increase of only 1.3% in 2003.

Economic growth in 2004 should be more balanced than in 2003, when it was boosted entirely by domestic demand and net exports contributed negatively. In 2004 net exports should make a positive contribution of 0.4% to economic growth and hence become the driving force behind the pick up in growth. Growth of final national demand should accelerate to 2% this year, from 1.7% in 2003. Next year's economic growth will depend on final national demand. The sharp rise in investment, in particular, will cause an acceleration in national demand of up to 2.6% in 2005. Combined with strong export growth, this implies a speeding up of imports, resulting in a zero contribution of net exports to economic growth next year.

After a net gain of 2,300 persons in 2003, employment should show an average annual rise of respectively 17,700 and 31,700 persons in 2004 and 2005. The unemployment rate should mark its third consecutive rise this year and only decline marginally in 2005.

The decrease in underlying inflation from 2% last year, to 1.6% in 2004 and 1.5% in 2005 will be more than compensated for by the recent oil price rises, resulting in headline inflation of 2.1% in 2004 and 2% in 2005.

STU 02-04 : Special Topic - What is the future for the industrial sector in Belgium?

The medium-term outlook for Belgium is pointing towards a GDP growth rate of 2.2% during the 2004-2009 period, which is slightly higher than potential (2.0%). This favourable development is due to both net exports and domestic demand. Private consumption should become more dynamic during the 2005-2009 period, particularly thanks to the increase in households’ disposable income (especially due to tax reforms and increases in employment and social benefits). Investment growth should attain 2.9% during the 2004-2009 period, mainly reflecting the increase in business investment. After ini-tially accelerating in 2004, average export growth should be 5.4% and the contribution of net exports to GDP growth should be 0.2%. Thanks to limited increases in wages and import costs and a negative output gap during the first few years of the projection, the inflation rate will remain below 2% in the medium term.

The development of employment should reflect the favourable macroeconomic context, the limited in-creases in wage costs and various policy measures. After net losses in 2002 and 2003 and the creation of almost 9,000 jobs in 2004, about 30,000 jobs should be created every year during the 2005-2009 period. Industrial employment should fall by 44,000 persons during the 2004-2009 period and the number of jobs created in market services should exceed 200,000. Nevertheless, given the increase in the labour force (mainly in the 50-64 age class) the number of unemployed will barely decrease at all. The unemployment rate (broad administrative statistics) is still increasing in 2004 (from 14.1% to 14.4%), but will subsequently fall to 13.5% in 2009.

The public accounts are expected to show a clear deterioration, with a net public sector borrowing re-quirement appearing in 2004 and widening to 1.4% in 2006 before gradually declining to 0.7% by the end of the projection period.

STU 01-04 : Special Topic - A post-mortem analysis after ten years of Economic Budget

In 2003, real economic growth in Belgium amounted to 1.1% thanks to the recovery registered in the second half of the year. World trade growth, which has been remarkably strong since the last few months of 2003, should weaken and the impact of the more expensive euro should make itself more profoundly felt. The pace of exports and GDP growth should then slacken a little by the end of this year. All in all, GDP at constant prices should grow by 2.0% in 2004.

Last year, solid domestic demand combined with disappointing exports led to a considerable negative contribution of net exports to GDP growth. Thanks to the strong recovery of exports and the weaker growth of domestic demand, that negative contribution should be transformed into a slightly positive contribution this year. Households will only reduce their savings rate when the situation on the labour market becomes noticeably brighter. However, the unemployment rate should only stabilize by the end of 2004, thereby preventing a further fall in the savings rate.

This year, a gradual increase in employment should be registered. By the end of the year, employment should be 16,500 units higher than the level at the end of last year. Due to the low starting point at the beginning of this year and the fact that the increase is taking place gradually, employment in annual average should exceed last year’s level by only 7,000 units.

Headline inflation should increase by 1.5% in 2004, as compared with 1.6% last year. On the one hand, underlying inflation should drop significantly as a result of the past appreciation of the euro and the moderate evolution of unit labour costs. On the other hand, the downward impact of the abolition/ reduction of radio and television license fees has been almost exhausted.

STU 04-03 : Special Topic - Personal income tax reform and wage formation in Belgium

The latest update of the FPB’s medium-term outlook for Belgium is pointing towards GDP growth of 2.3% on average from 2004 to 2008. This development can be largely accounted for by domestic demand, whereas the role of (net) exports is expected to be more limited. After moderate growth in 2003, the evolution of private consumption should be more dynamic during the 2004-2008 period, particularly thanks to a favourable development in households’ disposable income (stimulated especially by reductions in personal income tax). The growth in gross fixed capital formation should reach an average of 2.9% during the period 2004-2008, notably reflecting the expansion in business investment. Export growth should be 5.1% on average, compared with growth of 5.6% in our potential export markets: the structural loss of export market share should be confirmed.

Inflation should be below 2% in the medium term, thanks to moderate wage increases compatible with productivity gains, cuts in social security contributions and the extension of production capacity. Employment is expected to show a gradual improvement: an average increase of 34,000 jobs should be seen during the 2004-2008 period. The unemployment rate in a broad sense should decrease from 14.2% by mid-2003 to 12.8% in 2008, a large proportion of the labour expansion being absorbed by growth in the labour force.

Given the present prospects for future economic growth, assuming no policy change but taking into account the most important measures decided within the framework of the 2004 budget, the financing capacity of public administrations should go into deficit in the medium term (0.5% of GDP in 2008). The goal of a positive financing capacity (0.3% of GDP in 2007) is not expected to be reached without additional budgetary measures. Nevertheless, the total public debt to GDP ratio should continue to fall, going down by about 17 percentage points between 2002 and 2008.

STU 03-03 : Special Topic - Belgian transport outlook to 2010

Both confidence indicators and some hard data now suggest that economic activity in the euro area should register a moderate recovery during the last part of 2003. Even if risks are still present, they are more balanced than a few months ago.

During the last few months, confidence is rising again in Belgium. GDP growth is forecast to pick up slightly in the second half of the year, and amount to 0.9% in 2003. With a far less dynamic pace than was seen during the previous cyclical recoveries in 1996 and 1999, annual average GDP growth should amount to 1.8% next year.

This year, as a result of the stronger euro and the weakness of the euro area economy, net exports should make a very negative contribution towards economic growth (-0.9%). Real GDP growth should be exclusively driven by domestic demand (1.8%) as a result of the cutback in personal income tax rates and the improvement of business profitability. Next year, domestic demand should grow at the same pace as this year, but GDP growth should be more balanced.

A gradual improvement in domestic employment is not expected to take place until the last quarter of 2003. In response to this slowly improving labour market situation in 2004, the household savings rate should not begin to decrease until the second half of 2004. Next year, CPI inflation should be by 1.4%, as compared with 1.6% this year. This fall is inspired by the past appreciation of the euro and the moderate development of unit labour costs.

STU 02-03 : Special Topic - Estimating potential growth in Belgium

Economic activity remained subdued in the euro area in the last quarter of 2002 and early estimates point to a stabilisation in the first quarter of the current year. International organizations are forecasting a gradual but only modest recovery in the course of 2003. In Belgium, GDP growth was higher than in the main neighbouring countries in the last quarter of 2002. This should also be the case in the first quarter of 2003. The FPB leading indicator for Belgium confirms the scenario of a recovery during the course of 2003. Annual GDP growth should nevertheless be only slightly above 1% this year.

Various risks could jeopardise the recovery in the euro zone: the continuing depreciation of the USD, and a slower recovery of confidence due to the situation in the labour market and/or the stock market. The medium-term outlook for Belgium is pointing towards a GDP growth rate of 2.4% during the 2004-08 period, which is slightly higher than potential (2.1%).This favourable development is due to both net exports and domestic demand. Private consumption should become more dynamic during the 2004-2008 period, particularly thanks to the increase in households’ disposable income (especially due to tax reform). Investment growth should attain 3% during the 2004-08 period, mainly reflecting the increase in business investment. Average export growth should be 5.3% during the same period and the contribution of net exports to GDP growth should be 0.3%. Thanks to limited wage and import cost increases and a negative output gap in the first years of the projection, the inflation rate will remain below 2% in the medium term.

The development of employment should reflect the favourable macroeconomic context, the limited increases in wage costs and various policy measures. After stagnating in 2003, about 32,000 jobs should be created every year during the 2004-2008 period (as compared with 43,000 jobs created on average during 1996-2002). Industrial employment should fall by 38,000 persons during the 2003-2008 period and the number of jobs created in market services should exceed 200,000. The unemployment rate (including long term unemployment of older workers) is still increasing in 2003 (from 13.3% to 14.0%), but will subsequently fall to 12.9% in 2008. The proportion of active job seekers within broad unemployment will increase, due to recent policy measures aimed at limiting early retirement.

The public accounts are expected to show a clear deterioration, with a net public administrations borrowing requirement appearing in 2003. Equilibrium is not expected to be reached until the end of the period covered by the forecast.

STU 01-03 : Special Topic - Reform of network industries in Belgium

In the first half of 2002 the world economy seemed to recover from the sharp decline during 2001. This recovery was not, however, confirmed during the second half of the year.

In this muddled international business climate, the recovery of the Belgian economy is postponed until the second half of 2003. In annual average terms, GDP should grow this year by 1.3%. For the first two quarters of this year, positive but very modest GDP growth is assumed. Growth should be higher during the second half of the year, but clearly not as high as seen in previous economic recoveries in 1996 and 1999. Under these circumstances, the employment rate should fall for the second consecutive year, thus scoring 0.6 points lower than its previous peak in 2001. Consumer price inflation should remain rather stable at around 1.4%.

As economic agents are at present spellbound by the growing threat of a war in the Middle East, and the outcome of that conflict situation is hard to predict, the uncertainty margin surrounding the international economic context, is of course extremely high.

Network industries in Belgium - Economic significance and reform

STU 04-02 : Special Topic - Stock market prices and economic growth

In October, the FPB updated its medium-term outlook for Belgium until 2007. This projection is pointing towards a GDP growth of 2.5% on average from 2003 to 2007. This development can be largely accounted for by domestic demand, whereas the role of (net) exports is expected to be more limited. Private consumption should be more dynamic during the forecasting period than during the nineties thanks to a favourable development in households’ disposable income (stimulated especially by reductions in personal income tax). The growth in gross fixed capital formation should attain an average of 2.9% during the period 2003-2007, notably reflecting the expansion in business investment. Export growth should be 5.1% on average: the structural loss in export market share should be confirmed and the contribution of net exports to GDP growth is expected to decline.

The inflation rate should be below 2% in the medium term. Assuming no shocks on commodity prices, the main domestic factors behind this moderate inflation are wage increases compatible with productivity gains, cuts in social security contributions and the extension of production capacity.

Employment should show a gradual improvement: an increase of 33,000 jobs on average should be observed during the 2003-2007 period (as compared with an increase of 40,000 jobs, on average, during the 1996-2000 period). However, a large proportion of the labour expansion should be absorbed by an increase in the labour force. Therefore, the unemployment rate in a broad sense should only decrease from 13.5% by mid-2002 to 13.2% in 2007.

Assuming no policy change but taking into account (as far as possible) the measures decided within the framework of the 2003 budget, the financing capacity of public administrations should be close to balance between 2003 and 2006 and a small surplus would be observed in 2007. Taking into account the computed output gap and the resulting cyclical budget component, the structural (cyclically adjusted) balance would be positive but slightly declining from 2002 onwards.

The objective of a positive financing capacity (0.5% of GDP in 2005 as mentioned in the new Stability Program for Belgium) is not expected to be reached without additional budgetary measures. However, the total public debt to GDP ratio should continue its decline, but at a slower pace if compared with the 2001 forecast. The decrease should represent about 21% of GDP between 2001 and 2007.