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Belgium: Belgium Business Forecast

2012/05/13

 

 

Belgium Business Forecast

Belgium has enjoyed a robust recovery, but is heavily exposed to turmoil in the eurozone.

A particular concern is the national debt that, at close to 100% of GDP, leaves Belgium vulnerable to a deterioration in risk sentiment and slowdown in economic increase.

Although the formation of a new government has ended 18 months of political paralysis, the-party coalition could from now on struggle to overcome ideological differences in order to tackle much-needed fiscal and economic reforms.

Major Estimate Changes

The continued downturn in eurozone economic activity has prompted a downward revision to our increase forecasts. We now project Belgian economic increase of just 0.5% in 2012, revised down from 0.8% before.

Key Risk To Outlook

Downside Risks To Medium-Term Increase: There are significant downside risks to our economic increase forecasts, particularly stemming from the impact of fiscal consolidation and the eurozone

sovereign debt crisis.

Upside Risks To Inflation: Further euro weakness and the potential for a fresh rally in world energy prices could in turn keep inflation elevated.

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