BELGIUM'S PRIVATE SECTOR STAGNATION.

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Slow growth in both internal and external demand for Belgian goods and services will contribute to lackluster GDP expansion of 1.4 percent in 2003 and 1.5 percent in 2004. With unemployment lingering above 7.5 percent, consumer confidence will remain depressed well into the first half of next year, and that will put downward pressure on sales of high-end durables.

Belgian private sector consumption of goods and services should show anemic growth of 1.7 percent in 2003 and 1.8 percent in 2004. Persistent upward pressure on Belgian production costs will undermine cost competitiveness of local goods and services. As a result, sales should experience growth of less than 2.5 percent year-on-year through the remainder of this year and first quarter of 2004. By contrast, sales of imported goods and services should rise about 3 percent in 2003 and 5.4 percent in 2004.

The macroeconomic climate is generally favorable to increased household expenditure on goods and services, yet sustained upward momentum in Belgian sales will not be seen until a...

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