OECD Economic Outlook 69 - Biblioteca Hegoa

84 - OECD Economic Outlook 69
While fiscal policy is expected
to be broadly neutral…
… the tax reform should
enhance wage moderation and
economic growth
The expansion is projected to
continue, albeit at a slower,
more sustainable pace
Belgium: Demand, output and prices
1997 1998 1999 2000 2001 2002
current prices
billion BF
Percentage changes, volume (1995 prices)
Private consumption 4 694.7 3.3 1.9 3.1 2.5 2.4
Government consumption 1 857.2 1.4 3.4 2.0 1.4 1.3
Gross fixed capital formation 1 801.6 4.6 4.8 4.4 3.0 3.0
Final domestic demand 8 353.5 3.2 2.9 3.1 2.3 2.3
a
Stockbuilding - 20.0 0.6 -0.7 0.3 0.0 0.0
Total domestic demand 8 333.4 3.9 2.1 3.4 2.3 2.3
Exports of goods and services 6 608.3 4.4 5.2 11.8 7.7 6.5
Imports of goods and services 6 214.7 6.5 4.5 11.4 7.4 6.3
a
Net exports 393.6 -1.2 0.7 0.8 0.6 0.5
GDP at market prices 8 727.0 2.4 2.7 4.0 2.8 2.7
GDPatmarketpricesinbillioneuros 216.3
GDP deflator
Memorandum items
_ 1.6 1.0 1.2 2.5 2.1
Private consumption deflator _ 1.0 1.2 2.5 1.7 1.7
Unemployment rate _ 9.5 8.8 7.0 6.8 6.5
b
Household saving ratio _ 14.0 14.5 14.1 14.4 14.7
c
General government financial balance _ -0.9 -0.7 0.0 0.7 0.7
c
Current account balance _ 4.1 3.9 4.4 5.3 6.1
a) Contributions to changes in real GDP (percentage of real GDP in previous year), actual amount in the first column.
b) As a percentage of disposable income.
c) As a percentage of GDP.
Source: OECD.
Under the assumption of an average annual rate of growth of real GDP of
2½ per cent, the 2001 Budget and the stability programme for 2001-05 set as a target
a small overall surplus for both 2001 and 2002 – the first in 50 years. The OECD
expects somewhat larger budget surpluses – around ¾ per cent of GDP – due to a
slightly higher projected rate of growth and the inclusion of the proceeds of the
recent sale of the third generation of mobile telephone (UMTS) licences (representing
0.2 per cent of GDP). On a cyclically-adjusted basis, however, the primary surplus
(i.e. net of debt service) increases by somewhat less, to a little over 7 per cent of
GDP in 2001, pointing to a broadly neutral discretionary stance of fiscal policy. The
debt-to-GDP ratio is projected to fall below 100 per cent in 2002.
The general wage negotiations (accord interprofessionnel) for the years 2001-
02 seem to have broadly preserved wage moderation, since the “indicative norm” for
the maximum increase in wage costs (7.0 per cent over the two years) set by the law
on employment and competitiveness has again been accepted, including an additional
one-off increase of 0.4 per cent for the sectors which have performed “especially
well” over the past two years. The forthcoming income tax reform, which is
scheduled to take place over five years, will increase household purchasing power by
an estimated 1¼ per cent of GDP, making wage moderation more acceptable and
increasing incentives to work, thereby enhancing economic growth.
The economy is projected to grow at around 2¾ per cent both this year and
next, virtually closing the output gap by 2002. Private consumption and business
fixed investment are likely to decelerate but only moderately, as they will continue to
be supported by strong job creation and good profitability, respectively. While the