Although the service economy is growing rapidly in Belgium, the country remains heavily industrialized, importing great quantities of raw materials that are processed mainly for export. Such industry gives Belgium one of the highest gross domestic products in the world, despite its relatively small population. With about three-quarters of exports going to other European Union (EU) countries, Belgium’s economy is dependent upon its neighbors and the nation is a strong proponent of integrating European economies. In the early 1990s a growing budget deficit, combined with high unemployment rates, hindered Belgium’s overall economic growth. To reduce its deficit, the government initiated an austerity program that cut spending while raising taxes, as well as beginning a program to transfer some state-owned enterprises to the private sector. The budget in 1998 anticipated revenues of $109.5 billion and expenditures of $114.4 billion. Gross domestic product in 1999 totaled $248.4 billion.
Belgium has a free-enterprise economy. Only a small percentage of the country's active population is engaged in agriculture, suggesting the great role of industry, commerce, and services in the national economy. National prosperity was long mainly dependent on Belgium's role as a fabricator and processor of imported raw materials and on the subsequent export of finished goods. The country became a major steel producer in the early 19th century, with factories centred in the southern Walloon coal-mining region. After World War II, drastic monetary reform aided postwar recovery and expansion, particularly of the Flemish light manufacturing and chemical industries that developed rapidly in the north, and Belgium was one of the first European countries to reestablish a favourable balance of trade. By the late 20th century, however, coal reserves in Wallonia were exhausted, the aging steel industry had become inefficient, labour costs had risen dramatically, and foreign investment (a major portion of the country's industrial assets are controlled by multinational companies) had declined.
This modern private enterprise economy has capitalized on its central geographic location, highly developed transport network, and diversified industrial and commercial base. Industry is concentrated mainly in the populous Flemish area in the north, although the government is encouraging investment in the southern region of Wallonia. With few natural resources, Belgium must import substantial quantities of raw materials and export a large volume of manufactures, making its economy unusually dependent on the state of world markets. About three-quarters of its trade is with other EU countries. Belgium's public debt is expected to fall below 100% of GDP in 2002, and the government has succeeded in balancing is budget. Belgium became a charter member of the European Monetary Union (EMU) in January 1999. Economic growth in 2000 was broad based, putting the government in a good position to pursue its energy market liberalization policies and planned tax cuts.
