Belgium by the numbers, January 2015 1. GDP 4th quarter (compared with previous year): +0,9 % 2. Inflation rate (in the Eurozone) in December: -0,60% 3. Industrial production in December year over year: o.3 % 4. Unemployment rate in December: 8,4% 5. Current Account Balance in September: -0,4 % of GDP 6. Budget Balance (expected): -3,0 % of GDP 7. Ten year government bonds (30.1.2015): 0,65 %
During 2015, currency fluctuation and commodity prices will still be driving the markets. The instability of the euro was impacted by the Swiss National Bank’s decision to suddenly end its policy of maintaining a minimum of 1.20: 1 exchange rate between the Swiss franc and the euro. However, the SNB’s announcement has been overshadowed by Draghi’s announcement of quantitative easing, which will have more of an impact than the SNB’s decision due to the magnitude of money being put into the Eurozone economy.
The ECB’s Quantitative easing program will buy back €60 billion bonds per month lasting until at least September 2016. This will cause yields to go down, encourage more debt, and increase overall spending. The announcement has started to kick start growth and has already caused deflation to lessen somewhat. The deflation rate of -0,60% in December has already started bouncing back in January.
Even though, and partly because the euro has become continually weaker, there is still a positive outlook on the Belgian economy. Belgian exports to the US have become increasingly profitable and oil imports have become increasingly cheaper. In January domestic crude oil fell below $45 a barrel, which will cause the cost of Belgian imports to go down even further. The major countries don’t plan on cutting their oil production any time soon, which will cause prices to stay very low or plunge even further due to oversupply and inelastic supply and demand.
The unemployment rate has remained stable at the start of 2015. There is expected to be a slow turnaround in data for temporary unemployment and interim employment. Youth unemployment has decreased slightly as well in January. While the rate should stay around 8,5% for the foreseeable future, it could be further improved by faster job creation for 2015.
Industrial Production has seen an improvement since hitting a 2014 low of -3,45% in November as it ended December at 0,3% and now is forecasted to increase slowly for the next couple of months. The positive change in output will help overall GDP and the growth of the Belgian economy in the coming months. T
The current account balance has improved by 0,1 % last month, which is driving the percentage closer to zero. Oil and currency will still play big factors in getting the current account back to balance in 2015.
By Brandon LaBella at Dunhill Financial, to learn more about him: https://www.linkedin.com/pub/brandon-labella/a7/814/477/