A small, highly developed country in northwestern Europe with advanced industry and intensive agriculture. The Belgian economy has flourished for more than half a century due to its convenient geographical location, the use of modern technology and the presence of a highly educated multilingual workforce. Since ancient times, the country has been the world center for diamond cutting and diamond trading.
about the country
The Kingdom of Belgium is located in Western Europe, between France and the Netherlands, and in the north it is washed by the North Sea. The area of the country is 30 528 square meters. km (141st place in the world). The country's regions have their own economic specialization - almost all of Belgium's industry is concentrated in the Flemish zone, near the capital and in two large Walloon cities - Liège and Charleroi.
The country gained independence from the Netherlands in 1830 and was under German occupation during world wars. Since the founding of the state, it has been a constitutional monarchy, headed by the king, now Philip I. In April 1949, the country joined the Northern Alliance, and in 1957 - the European Economic Community. In 1999, it became one of the countries that established the EU and the Monetary Union. In 1980, it was transformed into a federation, which includes three regions - Flemish, the Netherlands and the capital Brussels.
The country's population is approximately 11.6 million people, the vast majority of whom live in cities - more than 94%. It has a high population density - about 342 people per square meter. km, second only to the Netherlands and some small European states in this indicator. About 75% of the population are indigenous to the country (Flemings and Walloons), the next largest national groups are Italians (4.1%) and Moroccans (3.7%). An important ethnic group are the Germans, who form the German-speaking community in one of the parts of Liege.
General characteristics of the Belgian economy
Modern industry and agriculture are largely export-oriented; up to 40% of industrial products are sold to other countries, mainly the European Union. A distinctive feature is the significant share of the public sector in the energy sector, utilities and transport.
Convenient geographic location and highly developed transport system allowed creating a widely diversified economy of the country. Belgium provides excellent transport services. They are important for the manufacturing and high-tech sectors. In brief, the Belgian economy is a high-tech post-industrial economy with a predominant service sector (72.2% of GDP), efficient industry (22.1%) and intensive agriculture (0.7%).
Some regions of the country have their own specialization, such Belgian industries as services and high-tech enterprises, most of which are concentrated in the northern, densely populated part of Flanders. Steel and coal production is located in the southern regions of Wallonia. The service sector, especially the financial sector, and diamond processing are concentrated in the metropolitan area.
international trade
The economy of Belgium is export-oriented; annually it sells goods worth about 300 billion US dollars on the international market. The country occupies a leading position in world trade in ferrous and non-ferrous metals. One of the leading European coal exporters. It has a developed automotive, radio engineering and electronic industry. It is also known worldwide for its woolen carpets and synthetic flooring. The main export destinations are Germany (16.6% of the total), France (14.9%) and the Netherlands (12%).
Having a small number of mineral deposits, the country is forced to import a significant amount of raw materials and export industrial products. This makes the economy dependent on price fluctuations in global markets, which characterizes the openness of the economies of Belgium and the Netherlands (having a similar economic structure). Imports are approximately $ 280 billion. The main import products are raw materials, machinery, rough diamonds and petroleum products. Key partners are the Netherlands (17.3%), Germany (13.8%) and France (9.5%).
Current state
Belgium is an industrialized country, with a predominant range of services, with a fairly high share of industry and a small agricultural sector. According to 2018 data, the country's GDP is 536.06 billion US dollars, 24th place in the world. In terms of GDP per capita last year, it was in 19th place with an indicator of $ 46,978.65. Belgium has significant government spending of more than 50% of GDP.
In 2017, the Belgian economy grew by 1.7%, and in the previous two years, GDP grew by 1.4% per year. The country quickly recovered from the global financial crisis of 2008, showing next year GDP growth of 7%, but in subsequent years the growth rate was low. The unemployment rate varies significantly by region, due to differences in the structure of production. While in Flanders the figure is 4.4%, in Wallonia it is much higher and equal to 9.4%. On average, unemployment in the country is quite high and reached the level of 7.3%. The industry and economy of Belgium as a whole quickly recovered from the terrorist acts of the spring of 2016, which have more impacted the hospitality industry and tourism in the capital region.
Budget issues
The budget deficit was about 1.5% of GDP, according to 2017. The government, formed by the center-right party, intends to further reduce the state budget deficit. This is primarily due to pressure from the European Union aimed at reducing a rather high national debt of the country, which is 104% of GDP, which is significantly higher than the recommended indicator set by the Maastricht Treaty of 60%.
The country's budget deficit is associated with poor tax collection and an excess of employees in the public sector. In addition, the government subsidized certain unhealthy sectors of the Belgian economy, including coal, steel, shipbuilding, textile and glass. However, these measures also have a chilling effect on economic growth. Sustainable recovery in private consumption can also be limited by: a reduction in government spending, low growth in household incomes and relatively high inflation.
Nearest measures and prospects
In the near future, the government intends to carry out institutional reforms to improve the efficiency of the Belgian economy in the future planning period. These measures include significant changes in labor market rules and social policies, in particular the payment of social benefits. Which should positively affect the competitiveness of Belgian wages in the regional labor market. The reforms worsened working conditions, which caused considerable tension in relations with trade unions, which held several long strikes in response.
The year before last, the government approved a program for changing tax legislation, which provided for a reduction in corporate tax rates from 33 to 29% by 2018 and to 25% by 2020. The tax plan also includes the introduction of tax incentives for innovation and small and medium-sized businesses, which should stimulate the attraction of private investment and increase competitiveness.
The country is completely dependent on imports of foreign fossil fuels, and the planned closure of seven Belgian nuclear plants by 2025 will only significantly increase its dependence on foreign energy sources. The country's role as a regional logistics center makes it vulnerable to fluctuations in external demand, which characterizes the openness of the economies of Belgium and the Netherlands, which are highly dependent on international trade, especially with trading partners in the European Union. Through the seaport of Zeebrugge, about half of trade with Great Britain and three quarters of trade with other EU countries are carried out.
Economic Trends
The country's economic policy is focused on the development of new forms of participation in the international division of labor. Competition from developing countries is intensifying in the traditional sectors of the economy for Belgium. These include metallurgy, chemistry and light industry. Therefore, the main trend in the development of the Belgian economy in the near future will be the expansion of the role of high-tech industries. The government will increase support for the sectors of the "new economy" - telecommunications, microelectronics, digital technology and biotechnology. Which requires a significant influx of investment.
To this end, the country intends to increase investment attractiveness, at the first stage due to the modernization of infrastructure facilities (sea and airports, highways). The main attention will be focused on maintaining the image of the "Golden Gate of Europe", which the country has been performing over the past 500 years, albeit with varying success. The state also intends to reduce its participation in the manufacturing and business sectors, gradually privatizing about 150 large companies. If we talk briefly about the economy of Belgium in the coming decades, it should become more high-tech and less state.
Industry
Since the early Middle Ages, the country has been a developed industrial center of Europe. The oldest industry is the textile industry, which once exported the famous Flemish cloth, still concentrated mainly in Flanders (up to 75%). Weaponsmithing began to develop in the Walloon city of Liège, and diamond cutting and the global diamond trade - in Antwerp.
For a long time, Belgian industry could be briefly described as developing and modernizing the country's traditional production. For many centuries, the country has been a world leader in metallurgy. In the Middle Ages, feron workshops were located here, now modern metallurgical plants producing special grades of steel, car rental and wire. The country owns 15-20% in the world export of metallurgy products. Metallurgical plants are traditionally located in the suburbs of Antwerp and Liège, where imported raw materials are brought.
In mechanical engineering, it specializes in the production of equipment for metallurgy and chemistry, vehicles, and electrical products. In the past few decades, the country has produced an average of about one million cars a year, most of which were originally intended for export. In addition to the fact that in Belgium the final assembly of machines is carried out, many metal-intensive spare parts are made of local steel.
In terms of the cost of its products, the chemical industry, which had arisen once based on the processing of blast furnace waste, is in second place after mechanical engineering. Belgium continues to be the largest producer of inorganic chemistry products. However, competition with developing countries in this market is intensifying. Therefore, in recent decades, the country's chemical companies began to specialize in the production of pharmaceutical products. The country has become one of the world leaders in the production of medicines. Belgian companies are making significant investments in the development of new drugs.
The country's famous food industry is important for the Belgian economy. Many global companies have placed their production here. About 600 brands of beer are produced in the country, some of them reach the age of 400-500 years. The world's largest beer producer, Anheuser-Busch InBev, grew out of a Belgian company.
Particular attention is paid to the development of the high-tech sector; more than 140 biotechnology companies operate in the country, which account for about 16% of the EU industry’s turnover and about 10% of research and development costs. Among the leading Belgian high-tech companies include Agfa-Gevaert, Barco, Real Software, as well as several pharmaceutical companies.
Agriculture
The country's modern agriculture is characterized by high intensity and excellent technical equipment. However, the role of the industry in the Belgian economy is insignificant, its share in GDP is only 0.7%. Agricultural land occupies about a quarter of the territory, of which about 65% is allocated for the cultivation of feed and pasture. About 15% of the land is cultivated grain, which satisfy less than half of the country's needs. The production of certain types of food exceeds domestic needs, such as vegetables, eggs, meat, butter and milk. The country is an importer of agricultural products, satisfying approximately 20% of the needs in the foreign market. The main procurement items are durum wheat, feed, tropical fruits.
The industry mainly operates farms, but more than half of them do not have their own land and are tenants of farmland. Small peasant farms survived in the south of the country in the Ardennes. In agricultural production, machinery and wage labor are widely used. Especially in large farms (with an area of 50-200 ha), characteristic of the central part of the country, in the provinces of Brabant and Hainaut.
Like industry, agriculture has its own regional characteristics. In Flanders, there are the main farms specializing in meat and dairy production; they grow flax, chicory, tobacco, flowers, vegetables and fruits. In the mountainous areas of the Ardennes, livestock production is developed - cattle and sheep are bred. In the central part of the country, on loamy soils, vegetable growing and gardening are thriving.
Energetics
The basis of energy consumption in Belgium is nuclear energy and imported hydrocarbons. Oil is bought in the Middle East, liquefied natural gas in Algeria and the Netherlands, and uranium concentrate in France, Canada, the USA and South Africa. Nuclear energy provides up to 54% of the country's electricity needs, combusted mineral fuel - up to 38.4%, a small amount is obtained from renewable sources and water resources.
After the accident at the Japanese nuclear power plant in Fukushima in 2011, the government decided to phase out seven Belgian nuclear power plants by 2025. However, in the autumn of last year, only one reactor was operating in the country in connection with the repair and technical work at other facilities. The operator of the Belgian nuclear power plants, Engie-Electrabel, said earlier that in operation mode in 2018, only two of the seven reactors in Belgium remain. Two power units were shut off due to deterioration of concrete in the silo structure, and two more were stopped due to leaks in the cooling system. Another reactor was shut down in November 2018 for planned technical prevention.
The shortage of electricity in the Belgian economy will be filled with imports from Germany, France and the Netherlands. According to preliminary estimates by experts, there may be a shortage of electricity of 4 thousand megawatts. The government does not even exclude the possibility of a blackout in the winter of 2018-2019 and a rise in prices.