Commendations on its pandemic response and its employment measures were two positive takeaways from the conclusion of the Article IV consultation with Belgium. Further efforts in some areas have been recommended by the International Monetary Fund’s Executive Board.
Pre-pandemic, Belgium's economy was strong — unemployment was at historic lows. The country's handling of the pandemic, both from an economic and health perspective, prevented a sharp rise in bankruptcies. While uncertainty is clearly present, growth is expected to remain robust.
“Directors noted the resilience of the financial sector… stressed the need to avoid premature policy tightening to allow for use of available buffers to bolster the recovery,” IMF's press release stated.
IMF’s executive board recommended attention to real estate risks as well as possible macroprudential measures. It underscored the role of policymakers to support the financial sector in adapting to challenges from low-interest rates and digitalization. It has also been assessed that the country's climate goals will need significant adjustment of resources and policy from the federal and regional governments.
The board additionally called for targeted support to remain active, and for the long-term fiscal goals to focus on making the economy better and inclusive. They underlined that the pandemic exacerbated labor market fragmentation, and recommended that active labor market policies and reforms to wage setting and employment protection to attain employment goals.
Belgium’s fiscal policy response to the pandemic has been one of the strongest in the region, according to the Organisation for Economic Co-operation and Development (OECD).