Wednesday, 13 June 2012

Belgium is world’s fourth most open economy

In Ernst & Young’s Globalization Index 2011, Belgium ranks in an excellent 4th place. Only Hong Kong, Ireland and Singapore perform better.
The annual Globalization Index examines the world’s 60 biggest economies, considering factors like trade, investments and capital flows, technology, foreign employees and cultural integration. Compared with the 2010 Index, Belgium moved up two spots.

Belgium scores particularly well for its export-driven economy and investment attractiveness. According to Ernst & Young, its small size and limited internal markets are the main factors behind the strong export culture in Belgium. Moreover, due to its well-developed infrastructure, good living standards, central location and highly-skilled workforce, Belgium is also praised by foreign investors. “These two indicators have always had a key impact on Belgium’s high scores in the Globalization Index,’ says Rudi Braes, partner with Ernst & Young Belgium.
An open economy also means a great reliance on global economic and trade networks. However, small, well-concentrated and export-dependant economies, being highly connected with the world’s markets, are also much more susceptible to the global economic situation, slowdowns and crises included. Belgium is no exception. The government has recently revised Belgium’s expected economic growth forecasts in 2012 from 0.8% to 0.2%. Moreover, Belgium’s economic decision-making remains strongly influenced by external forces such as the European Union or rating bureaus, both of which impact national policy-making processes.
Compared with 2008 and 2009, when the globalization of the world economy seemed to be slowing down, since 2010 onwards, it has been once more in full swing. It means that the world’s biggest economies are again becoming gradually more interconnected. Yet, more than 50% of CEOs are expecting a new wave of recession – a second economic shock (‘double dip’) – at the end of 2012, as reported in Ernst & Young’s survey on the 1,000 company leaders worldwide.
Such a crisis would inexorably oblige both governments and companies to introduce more efficient operational strategies in order to better secure national economies and markets respectively. Nonetheless, around 90% of respondents claim that when the double dip occurs, world governments will introduce more protectionist measures designed both to maintain sound budgetary policies and put rising national debts on hold. At any price.

AmCham Belgium’s position
AmCham Belgium welcomes Ernst & Young’s Globalization Index 2012, which once more confirms Belgium’s strong position in the global economy. Notwithstanding its small size, Belgium was and remains one of the key economic players worldwide, being very well connected with global business and commercial networks. Yet, there is still room for better performance, particularly in the area of public finances and wage policies, where automatic indexation, high social charges and a low employment rate are the main obstacles for companies to invest and create jobs. If Belgium addresses these issues, it can use its extraordinary strengths and easily regain a leading position in foreign investments. More on foreign investment trends and forecasts in Belgium can be found in the Chamber’s US Direct Investment Report in Belgium 2011.

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