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A prosperous New Year thanks to public investment?

Alexandra Trandafir, Communications & Community Manager, AmCham Belgium

On January 23, 2020, AmCham Belgium welcomed over 140 participants at its New Year Reception with Pierre Wunsch, Governor of the National Bank of Belgium. The event was sponsored and hosted by BNP Paribas Fortis in its historic Tapestry Gallery and offered an ideal opportunity for members of our community to network with peers and representatives from the federal and regional governments, parliaments and administrations.

The evening started with the unfortunate news that Governor Wunsch would not be able to address the AmCham community due to travel disruptions on his way back from a meeting of the European Central Bank in Frankfurt. With the promise to still participate in our event as soon as he arrived in Brussels, Governor Wunsch introduced us to Mr. Xavier Debrun, Senior Advisor in the Research Department of the National Bank of Belgium (NBB), who would speak on his behalf.

The NBB promotes policies to make the Belgian economy “dynamic, resilient, and prosperous for all its citizens and … business partners worldwide,” explained Mr. Debrun. He noted the resilience of the Belgian economy, but drew attention to its low growth – an average of 1.5% over the past four years. One potential tool to stimulate economic growth is public investment, the main topic of his keynote address.

Looking at public investment from a theoretical point of view, its potential return is certainly notable. For example, if higher investment is funded with borrowed money, it stimulates demand in the short and medium term, as investment projects typically span several years from design to completion. Moreover, research indicates that certain types of projects are more likely to create sustainable growth, such as investment in research & development (R&D), education and infrastructure.

While theoretical models are certainly indicative of the benefits of public investment, these should be looked at in combination with country-specific needs and constraints. According to Mr. Debrun, while Belgium has specific investment needs, they do not all require new public money. For example, public funding of education is already generous in Belgium. However, the skill mismatch we observe today on the labor market suggests that we have ample room to do better with regard to the way public funds are being spent, rather than focusing on the size of the investment.

Echoing one of AmCham Belgium’s priorities, Mr. Debrun emphasized the importance of public investment in basic infrastructure to reduce the time wasted in traffic congestion, improve labor mobility and reduce emissions.

While decisions about public investment clearly face constraints, both fiscal and political, Mr. Debrun concluded: “Belgium, like most euro-area countries, could benefit from a public investment boost.”

Governor Wunsch arrived towards the end of the evening to network with our members, and we had the chance to speak with him about the importance of AmCham Belgium and other like-minded organizations. Here’s what he had to say:

I think Chambers of Commerce and similar organizations play a very important role. I see the economy through macro-numbers, but it’s very important to get a feeling for what’s behind those numbers. Talking to people, understanding what their challenges are, what are the strengths of our economy, but also what are points of attention – this remains to me really essential. – Pierre Wunsch, Governor of the National Bank of Belgium

Keep an eye out on our social media channels for our video interview with Governor Wunsch.

AmCham Belgium would like to thank Governor Wunsch, Mr. Xavier Debrun and BNP Paribas Fortis for helping make our New Year Reception a success!

About the author

Alexandra Trandafir, Communications & Community Manager, AmCham Belgium

Alexandra is the Communications & Community Manager at AmCham Belgium. She guides members through their journey with the Chamber and makes sure they maximize the value created through their membership.