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Economic growth, which has been subdued, is projected to strengthen in 2017 and 2018. Private investment will be the main driver of growth, in response to high capacity utilisation and favourable financial conditions. A pick-up in international trade will support exports. Private consumption, however, will be moderated by still subdued real wage growth. Tighter labour and product markets will push up inflation in 2018.
The fiscal stance is projected to be broadly neutral this year and accommodative in 2018 due to planned labour tax reductions. The recent reform of the wage-setting system holds the promise of enhanced international cost competitiveness. Improving educational outcomes of socio-economically disadvantaged groups and increasing training for the low-skilled would make growth more inclusive.
Belgium is a very open economy with production deeply embedded in global value chains. However, the gains from globalisation have not been evenly shared. Geographical disparities in unemployment are large, and educational and labour market outcomes of immigrants and their children are poor. Improved transport infrastructure and lower transaction costs for buying a house would boost spatial mobility in the labour market.
Economic Survey of Belgium (survey page)