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Western Europe / Belgium

The state of play: FDI in Belgium

Belgium has punched above its weight to become a European FDI hotspot over the past two decades, but its investment inflows tend to come in peaks and troughs.

Brussels-FDI-Belgium
Belgium, and its capital city Brussels (pictured), have acted as a magnet for FDI over the past 20 years in spite of their relatively small size. (Photo by Thierry Roge/AFP via Getty Images)

The Covid-19 pandemic has negatively impacted Belgium’s economy, with the country experiencing a double-digit drop in its GDP earlier in 2020.

Indeed, the National Bank of Belgium announced a 12.1% fall for the second quarter of 2020 when compared with the first three months of the year, as a result of the pandemic’s outbreak. This was the second quarter that Belgium had experienced a drop in its GDP, following a decline of about 3.5% in the first quarter of the year. However, the economy did stage a bounceback in the third quarter, growing by 10.7%, according to estimates by the central bank. This still leaves GDP levels below pre-pandemic levels.

However, the country has attracted high levels of FDI inflows over the past decade, according to data from the UN Conference on Trade and Development. However, the data shows that this growth has not been steady. Indeed, FDI inflows were $64.44bn in 2009, and then declined to $57.58bn in 2010, before jumping to $83.36bn in 2011, and then plummeting to $11.67bn in 2012. This yo-yoing continued until 2019, when FDI inflows were $9.7bn, down from $17.73bn in 2018, but up from $5.15bn in 2017.

Greenfield investment numbers have followed the same trend, with 209 projects taking place in 2019, down from 2016 in 2018, and up from 213 in 2017. In regards to Belgium’s FDI stock, it stood at $566.11bn in 2019, up from $555.94bn in 2015.

Belgium retains European FDI hotspot status

Belgium was the fifth most attractive destination country for FDI in Europe in 2019, according to data from EY European Investment Monitor, with France ranking first, followed by the UK, Germany and Spain.

The data also shows that business services was the most popular sector for FDI in Belgium in 2019, followed by transportation and logistics, digital, agribusiness, research and scientific instruments, and transportation manufacturers and suppliers.

The countries that invested the most in Belgium in terms of FDI projects in 2019 were the US, France, the UK, the Netherlands and Germany, according to the EY data. The US, France, the UK, Australia and Germany were the top five investors in terms of job creation.

EY’s data also revealed that Flanders attracted the most FDI projects in 2019 on a regional basis, followed by Brussels and Wallonia.