Economic growth is projected to moderate to around 1% in 2020-21. External headwinds will weigh on exports and business investment, despite supportive financing conditions. Private consumption will be more resilient on the back of past tax cuts and wage growth that will increase household disposable income. The job market is set to remain tight, with the unemployment rate at 5.4% at the end of 2021.
Easing administrative burdens and simplifying entry regulation in professional services, retail and network industries and streamlining the insolvency regime would boost competition and productivity growth. Further reducing the tax wedge on labour, particularly for the low-skilled, would encourage employment.
A sound macroeconomic policy framework, high quality education and a combination of market-based policies and a redistributive welfare state have boosted GDP per capita to well above the OECD average. Although growth weakened since the global financial crisis, Belgium ranks among the ten most competitive countries in Europe. The financial sector has recovered from the severe shock which hit the banking system in the aftermath of the financial crisis, aided by government bailouts and new prudential measures. Belgians enjoy high well-being in many dimensions, notably worklife balance, health, education and civic engagement. Income inequality after tax and transfers is comparatively low. Belgium has the lowest gender wage gap among the OECD countries.