The Belgian economy was severely hit by the worldwide recession in 2009. The economy shrank by 3 percent, which is the sharpest decrease seen since World War II, according to the Annual Report of the Belgian National Bank. The Bank also foresees the Belgian economy growing by 1 percent in 2010, supported by government action taken to strengthen the economy.

Belgium’s GDP in 2009 was € 337,75 billion (current currency exchange rate), while the budget deficit increased up to 6 percent. In addition, 64.000 jobs were lost. The Governor of the Treasury, Guy Quaden, insists the Government should tackle the budget deficit, in order to stimulate growth and competitiveness.

The negative cycle has been broken by the successful rapid adaptation of budgetary and monetary policies. According to Quaden several years will be necessary to make up for the losses of 2008 and 2009. Decreasing the budget deficit in order to stimulate growth and competitiveness is an imperative.

To do so, Governor Quaden points at the need to reform the policy on labor costs, and the need to focus on innovation.

Click here to read the Annual Report of the National Bank of Belgium

AmCham Belgium’s position
AmCham Belgium fully endorses Governor Quaden’s statement, as it has repeatedly held that Belgium’s competitiveness needs to be enhanced, and has to this end developed six recommendations in its publication Priorities for a Prosperous Belgium.

With 56 percent of the labor costs being tax, Belgium has the largest tax wedge of all OECD countries. Decreased labor costs will therefore encourage the generation of new jobs.

Improving the attractiveness and competitiveness of Belgium’s business climate, particularly for foreign investors, will lead to higher economic growth and prosperity for Belgium.