Belgium

Histogramme

AA1

LOW RISK for entreprise

  • Economic risk

  • Business environment risk

  • Political risk

  • Commercial risk

  • Financing risk

GDP USD455bn (World ranking 25, World Bank 2015)
Population 11.28 mn (World ranking 77, World Bank 2015)
Form of state Federal Parliamentary Democracy, Constitutional Monarchy
Head of government Charles Michel (MR)
Next elections October 2018, local elections; 2019, legislative elections
  • Strong business environment
  • Relatively low corporate debt
  • Diversified export structure in terms of products
  • High-skilled workforce
  • Presence of many European institutions
  • Highest corporate tax in the EU
  • High dependency to the eurozone business cycle
  • High public debt
  • High bank assets

Consumer spending expected to remain weak

GDP growth declined to +1.2% in 2016, below the eurozone average of 1.7%. This was due to a large extent to the slowdown in the main driver for growth, domestic demand. 

Private consumption rose by a mere +0.7% on a backdrop of the freeze of wage indexation (since 2015) and the rise in several indirect taxes. In addition, the 2016 Government budget implemented a shift in taxation from labor to consumption and capital in order to alleviate companies’ costs and boost competitiveness. 
The rise in indirect taxes such as VAT on electricity (up to 21%), withholding tax (from 25% to 27%), and higher excise duties on tobacco, alcohol, diesel and soft drinks, coupled with the commodity prices’ recovery to push inflation above 2% at the start of 2017.

Going forward, the reforms should continue to support the labor market. The unemployment rate fell from 8.3% in January 2015 to 7.7% in January 2017. However, real wage growth is set to remain negative. This will curb private consumption growth to +1.1% in 2017.

Firms profitability reaches record high

Net exports have driven growth in 2016 (+0.8pp) for the first time 2012. Total export gains have more than doubled in 2016 to EUR16bn and should reach EUR25bn in 2017, the best performance since 2011. 
A continued upswing in exports will rely on a few factors. First, lower labor costs were achieved through a gradual decrease in employers’ social security contributions from 33% to 25% by January 2018. Second, there is the lower euro which should average 1.07 against the USD in 2017. Third, rising demand in the eurozone and globally made life easier for exporters. 

Low oil prices, lower financing costs and - above all – moderated wages and reduced social security contributions have boosted firms’ margins. After Ireland, Belgium has been the eurozone country to benefit the most from the recovery in profitability, which was up by +1.4pp to 42.8%, a record high level.

Lower unit labor costs and the higher profitability buoyed the construction sector. In 2016 confidence continued to improve and production increased by +3.9%, the highest increase since 2011. Overall, investment in the construction sector returned to above pre-crisis levels at mid-2016 and now stands 5% above the 2008 highs. 
Nominal GDP grew by +2.8% in 2016 and should grow by more than +3.5% in 2017. The ongoing reflation process should improve the pricing power for companies and therefore support turnovers. Firms’ turnover in the manufacturing sector excluding energy-related sectors grew by +2.2% in 2016. Compared to France (+1.4%) and the eurozone (+0.8%) Belgium is an over performer. 

Business insolvencies remain above the 2007 level

In 2017 and 2018, business insolvencies are expected to continue to fall, but at a slower pace than in previous years: -2% and -5% respectively. The 2018 forecast - 8500 cases – is still 11% above the 2007 level (see Figure 4). 

Trade structure by destination/origin

(% of total)

Exports Rank Imports
Germany 17%
1
17% Netherlands
France 15%
2
13% Germany
Netherlands 11%
3
10% France
United Kingdom 9%
4
9% United States
United States 6%
5
5% United Kingdom

Trade structure by product

(% of total)

Exports Rank Imports
Pharmaceuticals 12%
1
11% Road vehicles
Road vehicles 10%
2
10% Pharmaceuticals
Organic chemicals 7%
3
9% Refined petroleum
Refined petroleum 7%
4
8% Organic chemicals
Plastics in primary forms 5%
5
5% Non metallic mineral manufactures, n.e.s.

Payment terms in Belgium are 35 days on average, though DSO could be improved and the transposition of EU rules on late payment in domestic law is not as demanding as in other EU countries.

  • Low

  • Medium

  • Sensitive

  • High

  • Payments

  • Court proceedings

  • Insolvency proceedings

Court proceedings are reliable and benefit from EU standards, but enforcing domestic judgments remains time consuming and costly, so pre-legal action conducted by collection specialists remains the most efficient option when it comes to recovering debt.

Although domestic insolvency law aims at rescuing companies to increase the chances of recovering debts, it provides no limitations as to how much of the debt may be written off in restructuration negotiations. It is rare for unsecured creditors to recover from insolvent debtors in practice.

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Collection Complexity Belgium

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