Real economic growth
Real economic contraction in 2020 with -11.1%
Real economic growth in the Flemish Region plummeted in 2020. As a result of the outbreak of the Covid-19 crisis, it is estimated that economic growth was -11.1%, an unprecedented figure. The economic projection foresees a strong but incomplete recovery in 2021 (+8.6%). The latter scenario is based on the assumption that there will be no new major containment measures in the event of a resurgence of the Covid-19 pandemic.
Economic growth improved in the years 2004-2007, with a 4.2% real growth of Flemish gross domestic product (GDP) in 2007. At the end of 2008, the financial-economic downturn began and made itself fully felt in 2009. In that year, the Flemish economy went into recession, with negative real growth (-1.8%). A partial recovery followed in 2010 and 2011, but in subsequent years, the debt and euro crisis emerged, which was accompanied by an accumulation of debt, primarily in Mediterranean countries and created tensions in the euro area. Economic growth in 2019 was lower than in 2018 due to a weaker international context.
Labour productivity a major determinant of economic development in covid-19 crisis
The real increase of labour productivity was an important component of Flemish real economic growth in the years from 2003 to 2007, but at the same time also an important component for the decline of economic activity in 2008 and 2009. Labour productivity was again on the rise in 2010 and 2011. From 2015 to 2019, the increase of employment has clearly been the most important component for the Flemish Region’s real economic growth.
The strong recession in 2020 is particularly noticeable in the sharp contraction in labour productivity, due to the decline in gross domestic product. Employment is also shrinking, but to a lesser extent for the time being. In 2021, labour productivity is projected to recover to a large extent, but employment is expected to decline further.
Flemish economic growth lower than EU average
The economic contraction in 2020 was slightly stronger in the Flemish Region than in the Walloon and Brussels-Capital Regions. This is due to the fact that sectors such as trade and catering, and the industrial branches of equipment and consumer goods are more strongly represented in the Flemish Region and are also more affected by the Covid-19 crisis than other sectors. However, it are also these sectors which are expected to see the strongest recovery in 2021. On average for 2020-2021, Flemish GDP would shrink by 1.7%. This is slightly more than the Walloon Region (-1.5%) or the Brussels-Capital Region (-1.4%).
The data for the EU27-countries are provided by the European Commission and foresee a smaller contraction of GDP. This explains why, according to the regional HERMREG forecast, the recession for 2020-2021 in Belgium would be -1.6%, whereas according to the international AMECO forecast it would be -0.5%. The data for EU-countries are therefore difficult to compare with those for the regions.
On average for 2020-2021, Italy and Spain would experience the strongest contraction. In Luxembourg, on the other hand, there would be zero growth over these years.
Gross domestic product (GDP): the monetary value of the final goods and services produced in a given country or region over one year’s time.
Real economic growth: the increase in GDP, expressed in real or constant prices, in which the impact of inflation has been filtered out.
Recession: a negative real economic growth during two or more consecutive quarters.