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Belgium Country Risk Report Q2 2018

Belgium Country Risk Report Q2 2018

Executive Summary

Core Views

We believe that the Belgian coalition government is likely to collapse before the end of its term in May 2019 and elections are likely in 2018. The polarised political climate means that coalition building will be as difficult as ever, if snap elections are held.


Executive Summary
Core Views
Key Risks
Chapter 1: Economic Outlook
SWOT Analysis
BMI Economic Risk Index
Economic Growth Outlook
Net Exports Set To Be A Tailwind In Coming Quarters
We have raised our forecast for 2018 real GDP growth in Belgium and we now see the economy being one of the few in the eurozone
that will not see growth slow relative to 2017. We continue to believe that private consumption and investment will be the main drivers of
growth but we now see net exports also providing a tailwind to the economy thanks to increased competiveness on the back of expected currency weakness and ongoing reforms
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
Monetary Policy
Implications Of ECB's Dovish Taper
The European Central Bank's tapering announcement in October 2017 points the way to a gradual exit from extraordinary
accommodation, but we continue to believe that policy will remain very easy for years. Our core view is that the ECB will continue
expanding its balance sheet until the end of 2018 and keep its benchmark interest rates on hold until 2020, a policy mix that will keep
the euro on the back foot against the US dollar
Currency Forecast
EUR: Rally Running Out Of Steam
We maintain a bearish outlook for the euro, predicated on our hawkish policy rate forecasts for the US Federal Reserve and our belief
that expectations for the pace of European Central Bank tightening are beginning to overshoot
TABLE: BMI EUROZONE CURRENCY FORECAST
Chapter 2: 10-Year Forecast
The Belgian Economy To 2027
Tepid Outlook Compared To Eurozone Peers
challenging macroeconomic backdrop. Structural reforms being implemented by the current administration will ensure that growth picks up more substantially beyond 2020
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Chapter 3: Political Outlook
SWOT Analysis
BMI Political Risk Index
Domestic Politics
Coalition Unlikely To Make It To 2019
Long-Term Political Outlook
Unity To Prevail
spurred by economic as well as cultural and linguistic divisions. An outright dissolution of the state is unlikely given the still sizeable
proportion of the population that supports union. Moreover, threats of terrorism will be an even more prominent issue in Belgium than in many other European countries
Chapter 4: BMI Global Macro Outlook
EM Growth To Accelerate In 2018 While DMs Plateau
TABLE: GLOBAL MACROECONOMIC FORECASTS
TABLE: DEVELOPED STATES ’ REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS ’ REAL GDP GROWTH, % y-o-y

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