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    Belgium by the numbers – December 2014

    Belgium by the numbers, December 2014

    1.       GDP 3rd quarter (compared with last year): +0,8 %

    2.      Inflation rate (in the Eurozone) in December: -0,2%

    3.      Industrial production in October: -0,6 %

    4.      Unemployment rate in November: 8,5%

    5.       Current Account Balance in September: -0,5 % of GDP

    6.      Budget Balance (expected): -3,0 % of GDP

    7.       Ten year government bonds (31.12.2014): 0,75 %

    Even though 2014 has come to an end, the growth of the dollar to the Euro doesn’t seem like it will come to an end anytime soon.  The dollar has strengthened from €0,72 to €0,82 per dollar for 2014. Next year the Eurozone is projected to expand by 1,3%, which is 0,4% higher than the projected growth for Belgium.  Initially, the Belgian economy was projected to grow at 1,1%, but forecasters have lowered their projection to 0,9%.

    Although Belgium only imports oil and doesn’t export it, an issue is starting to arise with the Russian economy that could impact Belgium. Belgium imports a significant amount of oil from Russia and oil accounts for more than 60% of Russia’s exports.  Russia’s fiscal break-even oil price for 2015 is $107 per barrel, which is going to make it very difficult to break-even.  It doesn’t help that the food import ban is still in place, depriving Russia of among other Belgian food items, Belgian Pears. 

    Ten-year government bonds finished the year off at a 0,75% yield for Belgium, which is substantially lower than previous months.   Belgians who invested when the yield was much higher must be pleased with the constant drop of the yield as it reduces even further.  The sudden drop of the yield has occurred because of the long overdue announcement of the European Central Bank purchasing €60 billion in bonds every month starting in March.  This will help increase consumer spending, but additionally cause the euro to drop even further. 

    The unemployment rate still remains the same and has been staying put around 8,5% for the past year.  There have been a lot of opportunities opening up for the younger generation, which is taking away from jobs for the older generation. It will be interesting to see if more social entitlement programs will be added to help the retirement of some of the older generation. 

    The current account balance has improved from -0,9% to -0,5 %, largely due to oil and currency.  The situation is continuing to improve and there is a chance that the balance will be positive for the first time in a while. 

    By Brandon LaBella at Dunhill Financial
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    https://www.linkedin.com/pub/brandon-labella/a7/814/477/