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Belgium Country Risk Report Q2 2016

Belgium Country Risk Report Q2 2016

Core Views

Belgium’s economic recovery is beginning to gain momentum. Growthin 2016 will be stronger than the previous year and in line with thebroader eurozone.

Government contribution’s to real GDP growth will be negligible inthe coming years, as the Belgian authorities remain committed toreducing its debt-to-GDP ratio.

A weaker euro combined with quickening growth and domesticdemand in the eurozone will provide a moderate boost to Belgium’sexporters over the forecast period.

Belgium’s extremely high national debt continues to leave it exposedto a potential deterioration in economic growth exasperating debtservicing pressure and also the possibility of yields increasing dueto eurozone instability.

Major Forecast Changes

No major forecast changes.


Executive Summary
Core Views
Major Forecast Changes
Chapter 1: Economic Outlook
SWOT Analysis
BMI Economic Risk Index
Economic Growth Outlook
Eurozone Demand Main Driver Of Growth
GDP growth in Belgium will be subdued in the years ahead. This will mainly be driven by higher eurozone demand and increasing
household spending, while government reforms of the tax system will positively impact employment in the coming years.
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECAST
Regional Economic Outlook
ECB: Underwhelming, But Still Substantial Easing
The European Central Bank (ECB)'s monetary policy easing on December 3 disappointed markets in terms of its depth and breadth.
However, strengthening economic and inflation conditions in the eurozone suggest that the ECB may be better off holding fire, and in
our view, the easing is still fairly significant despite disappointment on the headline figures. We continue to forecast a weaker euro in
Chapter 2: Political Outlook
SWOT Analysis
BMI Political Risk Index
Domestic Politics
Regional Tensions To Remain Subdued
Although Belgium is divided by language and wealth, regional tensions are unlikely to increase over the coming years, as Wallonia's
economic position improves and the call for Flemish independence wanes. On the contrary, political and social tensions are more likely
to emerge between native Belgians and the country's large immigrant community.
TABLE: POLITICAL OVERVIEW
Long-Term Political Outlook
Unity To Prevail
Flemish separatism, although less significant than in previous years, will remain a political risk facing Belgium over the coming decade,
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 3: BMI Global Macro Outlook
Global Macro Outlook
Unfinished Business In 2016
TABLE: GLOBAL ASSUMPTIONS
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
TABLE: BELGIUM – MACROECONOMIC DATA & FORECASTS

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