Belgium Investment Climate Statement 2015

The Kingdom of Belgium (Belgium) is a nation located in Western Europe. In 2015, the Belgian economy is expected to grow 1.1 percent, this is likely driven by rising household consumption and business investment. Lower energy prices and interest rates, and a favorable EUR/USD exchange rate are all expected to stimulate economic growth expectations and fuel exports, especially given Belgium's unique position as a gateway hub to Europe. However, the recovery remains fragile: weak consumer confidence, low competitiveness and continued economic slowdown in the euro area may constrain growth prospects, and a highly rigid labor market and complicated tax regime remain impediments to investment.AssetsBelgium boasts an open market well connected to the major economies of the world. As a logistical gateway to Europe, host to EU institutions, and a central location closely tied to the major European economies, Belgium is an attractive market and platform for U.S. investors. The Belgian government was active in the rescue of its major banks and the financial markets have largely stabilized, following reductions in bank debt and exposure to high-risk derivative markets. Foreign and domestic investors are expected to take advantage of improved credit opportunities and increased consumer and business confidence. Belgium is a highly developed, long-time economic partner of the United States that benefits from an extremely well-educated workforce, world-renowned research centers, and the infrastructure to support the broad range of economic activities.LiabilitiesBelgium's international competitiveness has been hindered by a rigid labor market that makes their workforce relatively more expensive compared to neighboring countries. Belgium's corporate tax rate at 33.99 percent is one of the highest in Europe and is only somewhat mitigated by a series of subsidies and tax deductions. The ongoing Sixth State Reform has slowly been shifting certain responsibilities from the federal to the regional governments. However, it is not yet clear how these evolving responsibilities may affect some of the incentives and deductions in place.On BalanceBelgium has a dynamic economy and continues to attract significant levels of investment in chemicals, petrochemicals, plastic and composites; environmental technologies; food processing and packaging; health technologies; information and communication; and textiles, apparel and sporting goods, among other sectors. Over the past few years, Belgium has lost some of its traditional manufacturing base, which had benefitted from U.S. investment. Over the past five years for instance, the U.S. automotive industry has almost completely pulled out of Belgium. American companies in particular have made recent investments in petrochemicals, health technologies, and information and communication.