The economic upswing, which began in 1997, is proving to be durable and robust. Real economic growth has averaged about 3 percent in the past three years, despite the dioxin crisis in 1999. Real GDP is expected to grow by nearly 4 percent this year. Indeed, in this respect Belgium has pulled ahead of both Germany and France. Progress on structural reform has, however, been slower than on the fiscal front.
Serious weaknesses persist, particularly in labor markets.
Despite substantial increases in employment and reductions in the national unemployment rate, labor force participation remains low, especially among older workers, and unemployment is still too high. The labor market situation also has an important, and worrying, geographical dimension, reflected in longstanding economic disparities. Moreover, in the current upswing unemployment rates have fallen substantially in most of Flanders and in parts of Wallonia, but not in the relatively disadvantaged areas of the country. As regards the immediate future, almost all forecasters anticipate growth will be about 3 percent in 2001, which would represent a modest pickup in the pace of activity from the second half of this year. Headline inflation, which has risen due to world oil price increases, is expected to subside again as oil prices decline somewhat.