Success in Business Requires Training and Discipline and Hard Work. but If
Total Page：16
File Type：pdf, Size：1020Kb
Success in business requires training and discipline and hard work. But if you’re not frightened by these things, the opportunities are just as great today as they ever were. David Rockefeller (1915 - ) © Charline Lancel CHAPTER 9 Economy and Industry Riding out the Global Slowdown Soaring oil prices have fuelled a global economic slowdown and curbed GDP growth, but Belgium’s stable, diversified economy is well-placed to ride out the current economic conditions. Economy and Industry © Christophe Ketels / Compagnie Gagarine The soaring cost of oil is causing growing business confidence index showing compiled “in a context of considerable strain to economies around the world and a sharp drop in confidence in this turbulence in financial markets as a result of Belgium is no exception. With oil prices industry, while business indicators edged the crisis in the US housing market, a sharp more than doubling in the past year to upwards in construction and trade. rise in oil prices and other commodities”. a record US$145 a barrel in early July The economy ministry’s Federal Planning The figures show that Belgium’s GDP 2008, the impact is being felt acutely Bureau recently published its annual medium growth is expected to slow to 1.7% in by consumers and businesses alike. and long-term projections for Belgium, 2008 and 2009 down from 2.7% in 2007. Businesses in the manufacturing revising its 2008 and 2009 GDP growth figures The figures are much closer to those of the industry in particular are feeling the pinch down in line with the current slowdown. The euro area, which is expected to show 1.6% with the National Bank of Belgium’s June ministry said that the latest figures were and 1.5% growth in the next two years. 148 Best of Belgium drivers blocked roads into Brussels on the eve of an EU summit to push leaders for help coping with the skyrocketing fuel prices. While the government is unlikely to give in to demands for fuel subsidies, the impact of these price shocks on the economy is expected to dissipate over the coming months. Business and consumers alike can take comfort in the stability and diversity of the Belgian economy over the past year, which serves as a cushion against possible global knock-on effects. In 2007, despite fears that the global credit crunch would have downward implications for the Belgian economy, the country out-paced most expectations, posting 2.7% GDP growth. The NBB argues that the Belgian economy withstood the turmoil on the world markets in 2007, triggered by the crisis on the US sub- prime mortgage market and fears about over-exposure from financial institutions, thanks to high private consumption, corporate investments, exports and improvement in the labour market. Further signs of resilience in the Belgian economy were shown by increases in corporate investments, up by 5 % as a result of the increased use of production capacity and higher profits; an improvement of 2.5% in private consumption and purchasing power in real terms, a stabilisation of the savings ration at around 12.5% and the creation of 70,000 new jobs in the economy. Economic reports also showed that the Brussels region is the 3rd richest metropolitan area in Europe, while the port of Antwerp grew by an impressive 10% in 2007, handling 182 million tonnes of freight. Unemployment in Belgium decreased by 7 % in 2007 with twice as many jobs being created in 2007 as in 2006. Belgian small and medium-sized enterprises (SMEs) were responsible for the bulk of the new jobs created and structural employment in SMEs (excluding temporary jobs or student jobs) grew by 3.5 % in 2007, compared to 1.7 % in 2006. These new jobs in turn, resulted in a rise in purchasing power. Even with the current dip in GDP growth, the economy is expected to create 42,000 jobs annually in the next two years. The economy ministry also predicts that The current slowdown in GDP growth can expected following successful inflation- despite posting a fiscal deficit of between be largely attributed to the steep fuel and targeting in 2007 and reflects the “sensitivity 0.3% and 0.9% of GDP in 2008 and food price increases, which saw Belgium’s of the energy component to oil prices in 2009, the country’s debt will continue to year-on-year inflation rate hitting a 24-year Belgium, some administered tariff increases drop, reaching 70.8% of GDP by 2013. high of 5.8% in June 2008. The National for electricity and gas and the somewhat As the economy ministry and the Bank of Belgium (NBB) estimates that larger impact of the food price shocks”. NBB’s figures show, Belgium will enjoy the average inflation rate for 2008 will be Two sectors feeling the impact of “less strong” growth in 2008 and 2009 just under 4% and that this will ease to the fuel increases are agriculture and but the economy will pick up again an average of 1.9% in 2009. However, transport. In early July 2008, hundreds thereafter with forecasts of 2.2% GDP the current figure is well above what was of Belgian farmers, truckers and taxi growth for the 2010-2013 period. Best of Belgium 149 Enjoy doing Business in Belgium Guy Quaden, Governor of the National Bank of Belgium Belgium has a long-established position as represented about 12% of gross domestic a highly competitive economy and a prime product, one of the highest levels recorded destination for investors from all corners of among the advanced countries. The degree the world. The importance of foreign direct of openness to foreign trade is exceptionally investment in the country is clear proof of high, reaching some 48% in 2007. One of the this reputation: between 2003 and 2006, it main attractions of the Belgian economy is its 150 Best of Belgium London, Frankfurt and Paris. This advantage between finance raised through risk capital can be fully exploited thanks to an excellent and finance raised through borrowed capital, and extensive infrastructure of transport by allowing companies to deduct a notional (airports, sea ports, high speed rail and road charge (not stated in the accounts) from links), logistics and telecommunications on their tax base that corresponds to a specific which the country has built its reputation. percentage of their equity capital. Another The Belgian economy also benefits from measure that is much appreciated by firms being part of the euro area and its financial in Belgium is the one facilitating the very markets, where firms are not only able to trade rapid conclusion of agreements with the tax in one single currency but also have access authorities on rulings valid for up to five years. to extremely diversified and competitive Other significant measures contributed sources of financing in a capital market which the last years to drastically lighten the has now progressed to second place in the administrative burden on businesses, whether world rankings. Belgium is also renowned by simplifying or reducing administrative for its highly skilled and highly productive procedures - for instance, the time needed labour force, with a natural ability to work in to complete the formalities to set up a a multicultural and multilingual environment. business has been slashed from 56 days to Moreover, the fact that several international just three days - or by systematically using institutions, such as NATO, as well as the electronic means of communication for main EU institutions, namely the European accounting, tax and social security matters. Commission, the European Parliament The fact that Belgium is part of the and the European Council, have their European Monetary Union means that headquarters in Brussels, the country’s particular attention has to be paid to the capital, encourages strategic decisions relative movement in wage costs. Legislation to locate investment in Belgium. in force since 1996 requires the social partners Its macroeconomic policies guarantee to take account of wage developments in Belgium a stable environment that fosters Belgium’s three main trading partners, namely, private initiative. Thanks to the monetary Germany, France and the Netherlands, in policy conducted by the Eurosystem at their biennial round of wage-bargaining. the euro area level, the Belgian economy Without undermining the flexibility necessary enjoyed price stability during many years. for wage formation, this framework has Belgium’s fiscal policy is also committed to made it possible to ensure that wage rises stability, since public finances were almost remain moderate, whether in relation to these continuously in balance over this period. neighbouring countries or compared with Furthermore, with a view to guaranteeing the euro area as a whole. Government policy the sustainability of public finances over has also made a contribution here through the long term, taking into account the reductions in tax burden, targeted notably impact of the ageing population on future on foreign managers or research workers. pension and healthcare expenditure, the The Belgian economy has significant stability programme endorsed by the potential for development. Its integration into Belgian government provides for a budget the euro area and the structural reforms that surplus to be built up in the medium term. have been undertaken have most certainly Belgium is also implementing policies helped to strengthen it, as evidenced by designed to modernise the economy and the acceleration of its potential growth rate conform it fully to the strategic objective set over the last few years: according to the for the European Union by the EU heads European Commission’s estimates, that rate of State or government in Lisbon in 2000, rose gradually from 1.9% in 2003 to 2.5% in namely to become the most competitive 2006 and 2007 - a sharper increase than in and dynamic knowledge-based economy in the euro area as a whole, where it has risen the world, capable of sustainable economic from 1.9 to 2.1% over the same period.