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- GDP (PPP):
- $420.3 billion
- -0.2% growth
- 0.4% 5-year compound annual growth
- $37,883 per capita
- Inflation (CPI):
- FDI Inflow:
Belgium’s economic freedom score is 69.9, making its economy the 35th freest in the 2014 Index. Its overall score has increased by 0.7 point from last year, primarily reflecting notable improvements in investment freedom and labor freedom that counterbalance declines in freedom from corruption and business freedom. Belgium is ranked 17th among the 43 countries in the Europe region, and its overall score is above the regional and global averages.
Over the 20-year history of the Index, Belgium’s economic freedom has been largely stagnant. Despite notable score improvements in the areas of government size, regulatory efficiency, and open markets, the overall gain has been largely offset by combined declines in property rights and freedom from corruption. Belgium had risen to the status of economically “mostly free” during the second half of the 2000s but since 2011 has fallen back to the rank of “moderately free.”
The economic recovery that began in mid-2009 has been uneven, and structural weaknesses that include a rigid labor market and high taxation continue to hinder international competitiveness. Expansionary public spending has generated significant budgetary pressure. With government debt nearing 100 percent of the size of the economy, reducing the chronic budget deficit needs to be a high priority.
Belgium is a federal state with three culturally different regions: Flanders, Wallonia, and the capital city of Brussels, which is home to NATO and the European Union. In April 2010, an electoral dispute between the Francophone and Flemish parties led to the collapse of the coalition government. New elections in June 2010 did not produce a government. Negotiations to form a new government were finally completed in December 2011, and Socialist Party member Elio Di Rupo was sworn in as prime minister. In October 2012, the Flemish Nationalist Party made significant gains in local elections, calling for greater autonomy for Belgium’s Flemish-speaking regions. Services account for 75 percent of economic activity. Leading exports are electrical equipment, vehicles, diamonds, and chemicals.
Corruption is minimal in Belgium and did not increase even during the 19-month political crisis of 2010–2011. The government prohibits and punishes all forms of bribery. Property rights are well protected by law. Laws are well codified, and the judicial system is generally respected, but the courts can be slow in practice. Enforcement actions to protect intellectual property rights can be especially protracted.
The top individual income tax rate is 50 percent, and the top corporate tax rate is 33 percent. Other taxes include a value-added tax (VAT) and an estate tax. Tax revenue equals 44 percent of GDP, and government expenditures equal 53 percent of the economy. Additional measures have been undertaken to raise revenue to cover chronic deficits that have pushed public debt to over 90 percent of GDP.
Starting a business takes less than five days on average and costs about 5 percent of the level of average annual income. Bankruptcy proceedings are relatively easy. Despite efforts to ease the rigidity of employment regulations, factors that include high sectoral minimum wages still hold back labor market flexibility. The state imposes price controls on a wide range of fuels and other products and services.
EU members have a low 1.1 percent average tariff rate and, in general, few non-tariff barriers to trade. Investment in some sectors of the economy may be screened by the government. The financial system remains relatively stable, but the banking sector has undergone restructuring and become smaller. Government bailouts in recent years have increased state ownership of banks to over 15 percent of total assets.