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Recession will be ‘hard to avoid’, says Flemish chamber of commerce
Companies in Flanders are increasing worried by the state of the economy, according to Voka, the Flemish chamber of commerce. A survey of Voka members, published this week, found that 20% said they expected to see a decline in business activity in the coming six months.
This is a dramatic increase on just 18 months ago, when only 7% expected to see business activity fall. It is also the most pessimistic result since Voka started surveying its members six years ago.
While alarming, Voka thinks the result is hardly surprising. “The concern of Flemish enterprises fits in with the series of disappointing economic indicators recorded in recent months,” explained Bart Van Craeynest, Voka’s chief economist.
The problem is not so much an economic slump, such as that seen in 2008, but an accumulation of uncertainties that are weighing down economic activity. “Today, unfortunately, there is no lack of uncertainty: the Trump trade war, the faltering Chinese economy, Brexit, problems in German industry, the financial markets, and so on,” he continued.
Declining industrial activity in Germany is a particular concern, as is the increasing likelihood of a hard Brexit after 31 October. Some 8% of Flemish exports are destined for the United Kingdom, and a no-deal Brexit is likely to endanger 28,000 jobs in Flanders, Voka says.
“Recessions are notoriously difficult to predict, but the chance that the Flemish economy will end up in recession by the end of the year is greater today than at any time since the beginning of 2013,” Van Craeynest concluded. “Unless the German economy recovers in the short term and a no-deal Brexit is averted, a recession is probably hard to avoid.”
If the worst comes to the worst, Flemish business will look to the federal and regional governments (when they are formed) to minimize the impact. “With the other threats on top of Brexit, such as the trade wars and the stagnant German economy, it is clear that all levels of government must protect our country against such economic shocks,” said Hans Maertens, Voka’s director general.