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RBF numérique 2020/9

  • Jeudi 5/11/2020
    Peter Reusens, Geoffrey Minne

    Seven months after it was launched, the ERMG survey continues to take the pulse of the Belgian companies by measuring the impact of the COVID-19 crisis on their economic activity and their financial health. After a partial rebound between May and August, the Belgian companies’ (self-reported) turnover stalled in September and October at -14 % below normal levels. Moving forward, the COVID-19 crisis will most likely leave scars on the economy as expectations about next year’s revenue, investment plans, employment and risk of bankruptcy remain gloomy. In addition, the recent further worsening of the health situation and the new restrictive measures including the second lockdown of November 2020 are not yet reflected in the latest survey dating from October 20. These recent developments will undoubtedly worsen the already bleak economic outlook. Finally, the crisis will also have a lasting impact on the way employees will work: with wider use of telework, more flexible working hours and less business travel.

  • Jeudi 5/11/2020
    Isabelle Marchand

    More than six months ago COVID-19 first appeared in Belgium, and we now know the virus won’t go away any time soon. Apart from being a health crisis, the corona crisis also had a huge negative impact on the social and economic fabric of our country, often with devastating consequences for businesses and employees alike. An exceptional crisis calls for exceptional measures. This article offers an insight into the combined measures the financial sector, the National Bank of Belgium and the federal government have taken since mid-March to support both our society and economy in these challenging times

  • Jeudi 5/11/2020
    Hans Degryse

    COVID-19 puts firms under severe strain in countries where the pandemic continues to hit. The initial reaction was to provide outright transfers and liquidity support to weather this perfect storm. We argue that a focus on the solvency of firms and sectors is needed. We discuss several avenues on how to improve firm solvency such as conditional transfers and a pandemic equity fund. We further argue that support policies should avoid a further zombification of the economy: preserve firms (and jobs) that have a post-COVID-19 viable business model. Redirecting resources to the future engines of growth is desirable. Banks, policy makers and businesses face a balancing act to keep firms and sectors with “post-corona viable business models” liquid and solvent. At the same time, policymakers should avoid zombification and allow for creative destruction such that firms with “post-corona non-viable business models” are reorganized or liquidated.

  • Jeudi 5/11/2020
    M. Robyns

    The COVID-19 outbreak could have been described as a double whammy for the (Belgian) insurance industry, hitting both its activity as asset managers and its activity as risk carriers. In this article, Wauthier Robyns from Assuralia, the trade association of insurance undertakings, explains how pandemics test the limits of insurability due to a lack of robust statistics allowing sound underwriting and due to the systemic nature of losses arising simultaneously around the globe: as yet there is no self-evident blueprint for insurance solutions matching the entire fallout of such pandemics.

    The impact of COVID-19 across the spectrum of the insurance industry varies according to the distinct business lines. In some lines of business, the fallback in wages or production will be reflected by a fallback in premium income; in some lines like automobile insurance the lockdown led to a decrease in claims frequency while the long-term effect is still uncertain. Belgium did not experience strong controversies about business interruption insurances as elsewhere, since on the Belgian market such cover tends to be strictly related to events in which named perils caused material losses. Trade credit insurance deserves a special mention due to its important role in maintaining trust among businesses in troubled times, through a public-private partnership providing the guarantees needed to keep the covered volumes of business at the pre-COVID-19 level. Both the industry and individual companies took special measures to help their customers face an unexpected emergency.

  • Jeudi 5/11/2020
    Boekx / Deroose / Vincent

    In early 2020, COVID-19 sent financial markets into turmoil, while lockdown measures resulted in large and sudden economic losses. In response, governments, financial supervisors and central banks around the world quickly took unprecedented measures. This article focuses on the initial actions taken by the ECB. Sizeable asset purchases, including though a new Pandemic Emergency Purchase Programme, stabilised financial markets. The ECB also gave banks easier access to long-term central bank funding, while simultaneously easing its collateral requirements. That way, banks were able to satisfy euro area firms’ record demand for credit. However, the challenges ahead are manifold. While current conditions allow for a temporary shift towards expansionary fiscal policy, governments should be prepared for scenarios where borrowing costs rise. Otherwise, debt sustainability considerations will interfere with the conduct of monetary policy.

  • Jeudi 5/11/2020
    Koen Algoed

    Since the nineteen seventies, our country has built up a bad reputation with respect to its state of public finances. We didn’t comply with the Maastricht rules nor do and did we comply with both the preventive and the corrective arm of the Stability and Growth pact. On top of that, there are several fiscal headwinds which put an upward pressure on future Belgian public debt. Ageing and climate change are two well-known elephants in the policymakers’ room.

    Hence the fiscal maneuvering room to overcome future challenges seems limited in our country. There are, however, also several areas where the gains from structural reform are relatively high. The paper discusses a non-exhaustive list of some of these fiscal opportunities. Finally, we question our obsolete budgetary processes.

  • Jeudi 5/11/2020
    Buysse / Essers

    COVID-19 has led to profound turmoil and severe disruptions in our lives and economies. Even more than the 2008–2009 global financial crisis (GFC)—which was most directly felt in the United States and in Europe—the current pandemic-induced crisis is affecting nearly all countries around the world. This article provides an overview of the economic developments in emerging market economies (EMEs), with a focus on those that have been systemically important for the world and/or euro area economy: China, India, Brazil, Russia and Turkey. A decade ago, EMEs succeeded in weathering the crisis rather well and were the engine of the subsequent global recovery. Based on our overview, we conclude that EMEs will most likely not play that role again throughout the COVID-19 crisis.