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Belgium: Slowing construction

The economy is expected to continue to contract in the remainder of 2009, before a relatively slow recovery emerges in 2010 on the back of fiscal stimulus, easier monetary conditions, and a recovery in world trade.

Although house prices have held up better than in many other countries, the construction sector is also slowing. Despite rising unemployment, core inflation may persist, owing to automatic wage indexation.

While automatic stabilisers should be allowed to operate fully, additional fiscal stimulus might not be very effective nor advisable, given an already strongly rising public deficit and the high level of public debt. Fiscal sustainability needs to be secured through measures to achieve medium-term expenditure restraint at all levels of government as well as reforms to limit upcoming ageing costs.

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See also www.oecd.org/belgium

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©OECD Observer No 274, July 2009