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Belgian business investment in the context of the crisis


  • F. De Sloover

    (National Bank of Belgium, Research Department)

  • K. Burggraeve

    (National Bank of Belgium, Research Department)

  • L. Dresse

    (National Bank of Belgium, Research Department)


Against the backdrop of the worst economic crisis since the Great Depression of the thirties, the article analyses developments in business investment in Belgium. Firstly, it should be noted that, in 2009, Belgian business investment witnessed the biggest slump since 1980. However, when this sharp fall is considered in relation to GDP, it appears that it was not of an exceptional magnitude, given the sheer scale of the fall in GDP during the recession. Investment in Belgium exhibits a pro-cyclical pattern, following GDP movements, albeit with a larger magnitude. Furthermore, Belgian business investment has done relatively well in an international context. During the recession, Belgian investment saw a smaller cumulative decline than in the neighbouring countries and the euro area as a whole. The factors that lie behind the biggest decline in investment since 1980 include the huge slump in demand and economic activity during the recession, the sharp decline in the gross operating surplus of Belgian firms in 2009, the rise in external borrowing costs for businesses and the tightening up of credit conditions in the run-up to and throughout the financial crisis. The high degree of uncertainty and unstable expectations as a result of the crisis played a role here, too. The decline in investment nevertheless remained relatively small, especially in an international context and the Belgian economy’s resilience to the crisis and the sound financial position of Belgian firms seem to be the main factors behind this. Finally, given the importance of investment as a factor of innovation and technological progress, which contribute to balanced and sustainable economic growth, the article describes several factors that could become a threat to the gradual recovery of investment and, thus, to the Belgian economy’s growth potential in the longer term.

Suggested Citation

  • F. De Sloover & K. Burggraeve & L. Dresse, 2012. "Belgian business investment in the context of the crisis," Economic Review, National Bank of Belgium, issue ii, pages 29-44, September.
  • Handle: RePEc:nbb:ecrart:y:2012:m:september:i:ii:p:29-44

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    References listed on IDEAS

    1. Vermeulen, Philip & Mizen, Paul, 2005. "Corporate investment and cash flow sensitivity: what drives the relationship?," Working Paper Series 485, European Central Bank.
    2. Campello, Murillo & Graham, John R. & Harvey, Campbell R., 2010. "The real effects of financial constraints: Evidence from a financial crisis," Journal of Financial Economics, Elsevier, vol. 97(3), pages 470-487, September.
    3. Engelbert Stockhammer & Lucas Grafl, 2010. "Financial Uncertainty and Business Investment," Review of Political Economy, Taylor & Francis Journals, vol. 22(4), pages 551-568.
    4. Fuss, Catherine & Vermeulen, Philip, 2006. "The response of firms‘ investment and financing to adverse cash flow shocks: the role of bank relationships," Working Paper Series 658, European Central Bank.
    5. Catherine Fuss & Philip Vermeulen, 2006. "The response of firms\u2019 investment and financing to adverse cash flow shocks : the role of bank relationships," Working Paper Research 87, National Bank of Belgium.
    6. Jeanfils, Philippe & Burggraeve, Koen, 2008. ""NONAME": A new quarterly model for Belgium," Economic Modelling, Elsevier, vol. 25(1), pages 118-127, January.
    7. Ferrando, Annalisa & Martinez-Carrascal, Carmen, 2008. "The impact of financial position on investment: an anlysis for non-financial corporations in the euro area," Working Paper Series 943, European Central Bank.
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    More about this item


    investments; business fluctuations;

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles


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