Economy

Densely populated, Belgium is located at the heart of one of the world's most highly industrialised regions. Currently, the Belgium economy is heavily service-oriented and shows a dual nature with a dynamic Flemish part and Brussels as its main multilingual and multi-ethnic centre and a GNP/person which is one of the highest from the European union, and a Walloon economy that lags roughly one quarter behind (in GNP/person).

Belgium was the first continental European country to undergo the Industrial Revolution, in the early 1800s. Liège and Charleroi rapidly developed mining and steelmaking, which flourished until the mid-20th century. However, by the 1840s, the textile industry of Flanders was in severe crisis and there was famine in Flanders (1846-50). After World War II, Ghent and Antwerp experienced a fast expansion of the chemical and petroleum industries. The 1973 and 1979 oil crises sent the economy into a prolonged recession. The Belgian steel industry has since experienced serious decline. In the 1980s and 90s, the economic centre of the country continued to shift northwards to Flanders. Nowadays, industry is concentrated in the populous Flemish area in the north.

By the end of the 1980s, Belgian macroeconomic policies had resulted in a cumulative government debt of about 120% of GDP. Currently, budget is in balance and public debt is equal to 87.53% of GDP (2006). In 2005, the real growth rate of GDP was estimated at 1.5% while OECD's prognosis for 2006 was 2.9%.

Belgium has a particularly open economy. It has developed an excellent transportation infrastructure of ports, canals, railways and highways to integrate its industry with that of its neighbours. Antwerp is the second-largest European port. One of the founding members of the European Union, Belgium strongly supports the extension of the powers of EU institutions to integrate the member economies. In 1999, Belgium adopted the Euro, the single European currency, which replaced the Belgian franc in 2002. The Belgian economy is strongly oriented towards foreign trade, in particular of high value-added goods. The main imports are food products, machinery, rough diamonds, petroleum and petroleum products, chemicals, clothing and accessories, and textiles. The main exports are automobiles, food and food products, iron and steel, finished diamonds, textiles, plastics, petroleum products, and nonferrous metals. Since 1922, Belgium and Luxembourg have been a single trade market within a customs and currency union-the Belgium-Luxembourg Economic Union. Its main trading partners are Germany, the Netherlands, France, the United Kingdom, Italy, the United States and Spain. Belgium ranks thirteenth on the 2006 United Nations Human Development Index.

Regional Differences

Flemish and Walloon Economy

Productivity is +/- 10% higher per inhabitant in Flanders than in Wallonia (difference per person employed being lower as the percentage of persons employed is lower in Wallonia);
Flanders managed to attract more diversified investments from multinationals while Walloon economy relied more on heavy industry, and suffered more from the worldwide move away from it. Nowadays, Wallonia appears to be catching up to a certain extent in foreign direct investment level.
Wallonia has roughly three-quarters as many public servants per 1000 employees, compared with European Union averages; Flanders sits roughly one-quarter above the EU average;
Unemployment remained consistently more than twice as high in Wallonia than in Flanders, and even more in Brussels, during most of the last 20 years (November 2005, Flanders: 9,3%; Wallonia: 17.6% and Brussels: 22.0% )
Unionisation is very strong in both regions. Left-leaning, confrontationalist (socialist PS) is stronger in Wallonia, where the more conciliatory Christian-Democratic unions (CD&V) dominate in Flanders;
Flemish economy has a higher spending in research and development (one of the goals of the European Lisbon Strategy), mainly through a higher private R&D spending, but also thanks to higher public R&D spending of the Flemish authorities;
The whole country, especially large economic centres such as Antwerp, Brussels or Liège, suffers from persistent shortages for many skilled or highly skilled functions.
GDP per capita differs between the two regions. While the GDP per capita (PPP) was, in 2004, 27,356 Euro in Flanders, it was 21,858 Euro in Wallonia (or about 80% of Flanders').

Brussels

Being the de facto European capital, its economy is massively service-oriented. It is heavily dominated by regional headquarters of multinationals, by European institutions, by the still heavily (over)populated Belgian administrations, and by related services. Brussels also has more commuters coming mainly from Flanders, closely followed by commuters from Wallonia (and far smaller numbers of commuters from the Netherlands and France), then local employment. Within Brussels, the unemployment rate is higher than in the other Belgian regions (currently above 20%). This is mainly explained by a combination of:

a high percentage of mono-lingual French-speakers (Flemings in Brussels generally speak two languages or more), combined with mismatch between education and labour market needs
higher taxation rates than in Flanders and Wallonia
a high percentage of immigrants (>25%) with an average education level far below that of native Belgians

Nevertheless, the international role of Brussels provides Belgium with unique opportunities for economic growth. Private companies and international experts stress that improvements can be made (and quite rapidly) by much better education/retraining of the unemployed (both in technical as in language skills), by slimming down public bureaucracy and regulations, and through significantly better cooperation with Flemish and Walloon authorities.

Antwerp

The Antwerp agglomeration is the biggest economic centre of Belgium. Its economy relies on:

diamond trade (and to a much lesser and decreasing extent, diamond processing): Antwerp is the first diamond market in the world; diamond exports account for roughly 1/10th of Belgian exports
its port (second largest European sea port by cargo volume) and related transport activities (the Antwerp freight railway station accounts for one-third of Belgian freight traffic)
diversified industrial and service activities: such as car manufacturing, telecommunications, photographic products
chemical industry: the Antwerp-based BASF plant is the largest BASF-base outside Germany, and accounts on its own for +/- 2% of Belgian exports

Recent stagnation on economy appears related with a rather undynamic and unstable city government, expensive local public administration, rather high taxation by local and Belgian authorities (compared with competing centres abroad) and by relatively low innovation in several sectors.