The Federation of Belgian Companies announced this Friday morning its forecasts for the Belgian economy and the impact of the health crisis on our companies. An exercise that she performs every 6 months. And this time, in the words of the FEB’s managing director, Pieter Timmermans, the situation is alarming.
Economic activity was down 21% from normal in mid-May, and the Federation of Belgian Enterprises expects this level of activity to be still 5 to 9% lower in six months. “A sustained recovery is possible if a new government is quickly formed and implements a coherent recovery plan, investing in the future of businesses and giving households a balloon“, said the FEB in its Focus on the half-yearly economic outlook, published on Friday.
In the second half of May, more than 80% of the sectors reported activity below its normal level. Only chemicals and the banking sector (maintenance) or the food trade (on the rise) did not report declining activity.
During the first weeks of confinement, the number of people temporarily laid off quickly increased to around a quarter of the total number of workers in the private sector in early April. In late May, the number of temporary unemployed fell to just over 10% of workers in the private sector. In the next six months, 83% of the sectors surveyed expect a decrease in employment and none foresees an increase.
Elections could cloud the future
Regarding the future, the FEB envisages two scenarios: an evolution “controlled“of the virus (without a general second confinement) and a majority government quickly formed, which can find an agreement on a recovery plan. In this case, the Belgian economy would shrink by 8.3% in 2020, again and again the annual contraction the strongest since the post-war period. In this hypothesis, we could nevertheless experience a 6.4% recovery in 2021, which means that, at the end of 2021, economic activity would be only slightly below its level of end of 2019. In a more pessimistic scenario, which would see in particular the holding of new elections and the formation of a government drag a little more, the economic contraction could reach 9.1% this year and the recovery be limited to 3% l next year. At the end of 2021, the level of economic activity would then be 5 to 10% lower than at the end of 2019.
The employers’ organization also insists on the efforts to be implemented in order to avoid being submerged by a second wave of the coronavirus. It requires the development of an application for contaminated contact tracing, the availability of a massive and rapid testing capacity, the availability of adequate protective equipment …
The FEB calls for various measures to start a recovery, such as the adaptation of the evening work regime (from 8 p.m. to midnight) with a view to strengthening the e-commerce sector in Belgium and, for the work, a policy of support, training and activation of job seekers and lifelong learning are also crucial points. The experience acquired during this telecommuting crisis must be used to soften its legal framework, because it is also part of the response to the challenges of mobility and the climate, believes the federation.
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