International Monetary Fund. External Relations Dept.
Belgium’s economy is enjoying a robust expansion. Output growth has outpaced the euro area average since 2002 and reached 3 percent in 2006, its fastest pace since the start of the decade and well above its long-term trend. Sound economic policies have underpinned growth. Public finances have been in balance since the beginning of the decade, bringing about an unprecedented decline in the public debt burden (see Chart 1, top panel). Labor market reforms have helped more people find jobs. Nonetheless, the aging of the population and globalization make it increasingly evident that policies need to be strengthened further. With a new government taking office later this year, and a favorable macroeconomic environment, this is a good time to shift the pace of reforms into a higher gear.