Oecd Economic Surveys : Belgium-Luxembourg 1984-1985.

58 Pages·2.821 MB·English

by  OECD

OECD
ECONOMIC SURVEYS
1984/1985
BELGIUM
LUXEMBOURG
DECEMBER 1984
OECD ECONOMIC SURVEYS
f «, Ue"t PB6T6 .
BELGIUM-
LUXEMBOURG
DECEMBER 1984
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
Pursuanttoarticle 1 oftheConventionsignedinParison 14thDecember,
1960,andwhichcameintoforceon30thSeptember, 1961,theOrganisation
for Economic Co-operation and Development (OECD) shall promote
policiesdesigned:
- toachievethe highestsustainableeconomicgrowthandemployment
andàrisingstandardoflivinginMembercountries,whilemaintaining
financial stability, and thus tocontribute to the development ofthe
world economy;
- to contribute to sound economic expansion in Member as well as
non-membercountries in theprocess ofeconomicdevelopment; and
- to contribute to the expansion of world trade on a multilateral,
non-discriminatory basis in accordance with international obliga¬
tions.
TheSignatoriesoftheConvention on theOECDare Austria, Belgium,
Canada, Denmark, France, the Federal Republic of Germany, Greece,
Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal,
Spain,Sweden,Switzerland,Turkey, the United Kingdomand the United
States.ThefollowingcountriesaccededsubsequentlytothisConvention(the
datesarethoseonwhichtheinstrumentsofaccessionweredeposited):Japan
(28thApril, 1964), Finland (28thJanuary, 1969), Australia (7thJune,
1971) and New Zealand (29th May, 1973).
TheSocialistFederalRepublicofYugoslaviatakespartincertainworkof
the OECD (agreement of28thOctober, 1961).
©OECD, 1984
Application for permission toreproduce ortranslate
all orpart ofthis publication should be madeto:
DirectorofInformation, OECD
2, rue André-Pascal, 75775 PARIS CEDEX 16, France.
CONTENTS
BELGIUM
Introduction 9
I. Economie policy 10
A. Incomes policy 10
B. Fiscal policy 11
C. Monetary policy and financial flows 14
D. Other features of economic policy 19
II. Recent trends and short-term prospects 19
A. Recent domestic developments 20
B. Balance ofpayments 25
C. Short-term prospects 30
III. Labour market problems in the medium term 31
A. Characteristics ofunemployment 32
B. Explanatory factors 36
C. Medium-term outlook and government policy 46
IV. Conclusions 47
Notes and references 50
LUXEMBOURG
I. Economic policy 53
A. Restructuring of the productive system 53
B. Fiscal policy 54
C. Monetary situation 56
D. Incomes policy 56
E. Other economic policy measures 56
II. Recent trends and short-term prospects 57
A. Recent trends 57
B. Short-term prospects 57
Notes and references 59
Annexes:
I. Chronology of main economic policy measures 60
II. Income policy simulations 64
Statistical Annex 66
TABLES
Text:
Belgium
1. Public sector transactions 12
2. Central government budget: forecasts and outturns 13
3. Treasury financing and evolution ofthe public debt 13
4. Financing of the economy's borrowing requirement 17
5. Distribution of national income, saving and investment 20
6. Demand and output 21
7. Structure ofdemand 22
8. Recent labour market trends 22
9. BLEU balance ofpayments 27
10. Capital movements 28
11. Short-term forecasts 30
12. Standardised unemployment rates in Belgium and in the EEC 32
13. Wholly unemployed drawing benefit 32
14. Employment and unemployment in the OECD countries 34
15. Numbers ofwholly unemployed and manpower policy 35
16. Output and productivity in OECD countries 37
17. Investment growth 41
18. Relative wage costs by sector 42
19. Dependent employment by sector 43
20. Value added, wage per employee and dependent employment in the productive
sectors 44
Luxembourg
1. Central governmentbudget 55
2. Short-term forecasts 58
Statistical annex:
A. Gross domestic product 66
B. Origin ofgross domestic product at market prices 67
C. Gross domestic fixed capital formation by branch 68
D. Income and expenditure ofhouseholds and private non-profit institutions 69
E. Income and expenditure ofenterprises 70
F. Government revenue and expenditure 71
G. Industrial production 72
H. Labour market and wages 73
I. Area breakdown offoreign trade 74
J. Commodity breakdown offoreign trade 75
K. BLEU Balance ofpayments 76
L. Luxembourg - Gross national product 77
M. Luxembourg - Labour force, employment and unemployment 78
DIAGRAMS
la. Interest rates 15
\b. Comparative interest rates 16
2. Components ofmoney creation 18
3. Comparative consumer prices trends 23
4. Cross-country comparison ofprice-rise components 24
5. Indicators ofcompetitiveness 26
6. Exchange rates against selected currencies 29
7. Unemployment by duration 33
8. Profit indicators 39
9. Unemployment rate and capacity utilisation 40
BASIC STATISTICS BELGIUM
THELAND
Area (1000sq.km) 30.S Mainurbanareas(1-1-1983)inhabitants:
Agriculturalarea(1 000sq.km) 1982 14.0 Brussels 989877
Tillage(1000sq.km) 1982 7.1 Antwerp 919844
Liège 598560
Ghent 485385
THEPEOPLE
Population(1-1-1983),thousands 9858 Netmigration(1982) '-4448
Numberofinhabitantspersq.km 323 Totallabourforce(1983,thousands) 4213
Population,netnaturalincreaseper Totaldependantemployment 3007
1000inhabitantsin 1982 0.8 Agriculture 11
Manufacturingandconstruction 1003
Other 1993
PRODUCTION
Grossnationalproduct(1983),billionsof Grossnationalproductbyorigin,atmarket %
Belgianfrancs 153.6 prices(1983)
Grossnationalproductperhead(1983) USS 8241 Agriculture 2.4
Grossfixedinvestment: PercentofGNP(1983) 15.6 Industry 24.8
Perhead (1983)USS 1 285 Construction 5.2
Other 67.6
THEGOVERNMENT
Currentgovernmentexpenditureongoods CompositionoftheHouseof
andservices(1983),percentageofGNP 53.9 Representatives:
Currentgovernmentrevenue(1983)percentofGNP 45.1 Christian-SocialParty 29
Governmentdebt,31-12-1983,billionsof BelgianSocialist Party 29
Belgiansfrancs 3716 Liberal Party 25
Federationdesfrancophoneset
rassemblementwallon 4
Volksunie 9
CommunistParty 1
Others 4
Lastelections:8-11-1981
FOREIGNTRADE
Exports: Imports:
Mainexportsin 1983percentoftotal Mainimportsin 1983,percentoftotal
exports,S1TC(BLEU): imports.SITC(BLEU):
Ironandsteelproducts(67 + 68) 12.0 Ironandsteelproducts(67 + 68) 6.0
Chemicalsproducts(5) 12.0 Chemicalsproducts(5) 9.7
Machineryandapparatus(71 to77) 9.7 Machineryandapparatus(71 to77) 11.1
Textileproducts(65) 5.5 Textileproducts(65) 3.3
Transportequipment (78 + 79) 12.9 Transportequipment(78 + 79) 11.5
THECURRENCY
Monetaryunil: Belgian franc CurrencyunitsperUSS,averageofdailyfigures:
Year 1983 51.1302
Nov. 1984 60.3736
Note: Aninternationalcomparisonofcertainbasicstatisticsisgiveninanannextable.
BASIC STATISTICS LUXEMBOURG
THELAND
Area(sq.km) 2586 Majorcity,inhabitants:
Agriculturearea, 1982(sq.km) 1270 Luxembourg(1981) 78924
Woodland,1981 (sq.km) 821
THEPEOPLE
Population(1-1-1983) 365500 Totalemployment(1982,thousands) 159.0
Numberofinhabitantspersq.km 141 Agriculture 7.5
Population,netnaturalincreaseper Industry 58.4
1000inhabitantsin 1982 0.5 Services 93.1
Netmigration 1982 -367 Dependentemployees 138.7
Employers,self-employedpersonsanddomestichelp 20.3
PRODUCTION
Grossdomesticproduct(1983),billionsoffrancs 204.1 Grossdomesticproductbyorigin,at %
Grossdomesticproductperhead,USI(1983) 10921 marketprices(1981):
Grossfixedinvestment: Agriculture 2.7
PercentofGDP(1983) 19.9 Industry,energy 31.0
Perhead,USS(1983) 2175 Construction 6.6
Other 59.7
THEGOVERNMENT
Publicconsumption(1982),percentofGDP 14.6 CompositionoftheChamber:
Currentgovernmentrevenue(generalgovernment) ChristianSocial Party 40.7
(1982)percentofGDP 56.0 DemocraticParty 25.4
Centralgovernmentdebt.PercentofGDP WorkersSocialistParty 23.7
(December31st, 1982) 22.0 CommunistParty 3.4
Social DemocratParty 3.4
Others 3.4
Lastelection: 10-6-1979
THECURRENCY
Monetaryunit: Luxembourgfranc CurrencyunitsperUS$,averageofdailyfigures:
Year 1983 51.1302
Nov. 1984 60.3736
Note: Aninternationalcomparisonofcertainbasicstatisticsisgiveninanannextable.
ThisSurveyisbasedontheSecretariat'sstudypreparedfor
theannualreviewofBelgiumandLuxembourgbytheEconomic
andDevelopmentReview Committeeon 26th November 1984.
Afterrevisionsin thelightofdiscussionsduringthereview,
final approval ofthe Surveyfor publication was given by the
Committeeon 6th December 1984.
BELGIUM
INTRODUCTION
At the start of the 1980s, Belgium's economy showed several imbalances that were
becoming self-sustaining. In 1981 the current payments deficit was equivalent to nearly
4'/2percentofGDPandthegeneralgovernmentborrowingrequirementto 14percent,while
fast-risingunemploymentwasaffecting 10'Apercentofthelabourforce. Buttheapplication
of a vigorous adjustment policy in conjunction with a more favourable international
environment brought a rapid improvement in the current payments position, with visibles
backinbalancein 1984.Progressonthedomesticfronthasbeenslower. However,theoverall
economicsituation is likely to show an improvement in 1984. Activity gradually picked up,
supportedmainlybythepositiveforeigncontributiontogrowth.Butrestoredcorporateprofits
alsomaderoomforarecoveryinproductiveinvestment,withtheresultthatdomesticdemand
has probably stopped declining. The employment effects of the cyclical upturn were
accentuated by work-sharing measures, so that unemployment stabilised at the (very high)
level of 13%per cent ofthe labourforce. Belgium was slow tojoin in theprocess ofgradual
disinflation most OECD countries have experienced but inflation has eased appreciably
duringthepastsixmonths,withthe 12-monthrateofincreaseinconsumerpricesdowntoless
than 5 per cent.
In 1982theoverridingaimofeconomicpolicyhadbeentomakeenterprisescompetitive
and profitable again. In 1983, the emphasis was on curbing unemployment through
worksharing, offset by further wage restraint so as not to push up production costs. For
1984-1985themainaimistoreducetheimbalanceinpublicfinance,thetargetbeingtobring
downthenetcentralgovernmentborrowingrequirementfrom 12%percentofGDPin 1983to
7percentby 1987,boththroughanexceptionallevyonearningsandsocialbenefitsaswellas
byasqueezeon spending. Thissetofmeasuresisexpectedtoreducethegeneralgovernment
borrowingrequirementbyabout3%GDPpointsovertwoyears,tounder 10percentin 1985.
Meanwhile monetary policy continues to focus mainly on interest rate adjustment so as to
regulateexternalfinancialflowsandsupporttheexchangerateattheleastpossiblecosttothe
domesticeconomy. Short-term interest rates,which had risen appreciably from end-1983 to
mid-1984,weredown to 11 percentinSeptember 1984. Inrealterms, though,interestrates
-particularlylong-termrates-arestillveryhigh.Anewschemetohelpemploymenthasjust
been announced, based in particular on measures to encourage part-time work. In return,
wage growth will be limited to indexation increases.
The recovery is expected to continue into 1985, buoyed by the still favourable
international environment. But the outlook for domestic demand remains poor. Real GDP
growth will probably stay, as in 1984, atjust under 2per cent. The expected slowdown in
importpricesshouldhelpinflationtodeceleratefurther,sothatin 1985itislikelytoremainat