The Belgian economy is in danger of a sharp decline internationally

Every five years, the leading British consultancy, Center for Economics and Business Research (CEBR), produces long-term forecasts. In their latest report they already look ahead to the year 2039. And those prospects do not look particularly good for our country. If we are still ranked as the 24th largest economy in the world today, we will drop to 32nd place by 2039. A drop of no less than 8 places. Within Europe, only Austria dropped as sharply: from 28th to 36th place.

The reason why our country has fallen so far is mainly due to limited economic growth. The CEBR states that in the long term we will achieve an average economic growth of 1.3 percent. “And that is actually an optimistic estimate,” says Koen De Leus (BNP Paribas Fortis), who also writes in his book The new global economy looking ahead. “1.3 percent growth requires higher productivity than we can currently achieve. Even to achieve that limited growth, we have to step up our game. This means: boosting our education, reducing administrative burdens for entrepreneurs, investing in research and development, etc. Otherwise we will not achieve that 1.3 percent.”

The CEBR points to our robust labor market with low unemployment as a bright spot. Yet the aging population will increasingly erode our prosperity, says De Leus. “Unlike many other countries, our labor force is declining, and that makes it very difficult to achieve economic growth.” (Continue reading below the graph)

Black zero

The British think tank’s report also points to our poor public finances. “With a debt approaching 110 percent, you have little margin to invest heavily as a government. Germany does have that margin. They cling jealously to the ‘schwarze Null’, a balanced budget. But if they were to solve that, they could take plenty of measures to support the economy. Our country simply does not have that luxury. On the contrary, the next government must absolutely ensure that a path is created in which our debt stabilizes, debt reduction is only for afterwards.”

De Leus does note that countries such as France and Germany are also holding up better because of their size. “France, for example, is growing slower than us, but is holding up in the ranking,” says De Leus. “Such a ranking is ultimately relative. It doesn’t matter whether we are in 30th or 32nd place. More important are the trends this shows. The CEBR rightly notes that Europe is losing enormous economic importance. Today, Europe still accounts for 31 percent of the world economy, which has dropped to 20 percent. So it is not a purely Belgian problem. Countries such as Bangladesh or Rwanda have enormous potential to develop in the coming years and Europe is offering little in return.”