Economic expansion brightens market prospects in Benelux; lower price tags will also help boost American sales

ECONOMIC EXPANDION BRIGHTENS MARKET PROSPECTS IN BENELUX The outlook for growth of U.S. exports to Belgium, Luxembourg, and the Netherlands (Benelux) appears favorable, thanks to continued economic expansion in these markets and lower price tags on most U.S. goods. Several problems, though, remain on the minds of Belgian and Dutch economic planners, notably high unemployment and large budget deficits. For the immediate future, U.S. exports are expected to show healthy recovery from the doldrums of the 1981-85 period.

Netherlands

After three years of decline, U.S. exports to the Netherlands have headed upward. From January to June 1986, sales to the Dutch totaled $3.9 billion, an 8 percent gain over the same 1985 period. The resurgence is attributed to the depreciation of the U.S. dollar and growth in certain sectors of the Dutch economy. If the current pace is maintained, U.S. exports for the full year will exceed $8 billion, a level last reached in 1982. However, a few warning signs have appeared that may signal slower export performance over the rest of this year.

In an effort to offset declining revenues from lower prices for Dutch oil and gas, the Netherlands government plans to cut public spending and raise the tax burden on the private sector. These measures, according to the OECD, could have a strong negative impact on domestic demand and investment. The OECD predicts real economic growth will fall from 1.5 percent in 1986 to 0.75 percent in 1987. Official government sources, though, view this as too pessimistic and estimate real GNP growth of 1.5 percent in 1986 and close to 2 percent in 1987.

Current economic indicators show a steady, if unspectacular, economy. In April, manufacturing production was 3 percent higher than a year ago and factory utilization had risen to 85 percent of capacity. Consumer prices for the year are expected to show no increase and may even fall by 0.5 percent. First-quarter consumption figures were 2 percent higher than a year ago.

Best prospects for continued or expanded U.S. export sales are clustered around various high-technology sectors including computers and peripherals, software, telecommunications equipment, business and office equipment, medical equipment, and pollution control equipment.

Belgium

A steadily expanding Belgian economy, marked by a dramatically lower rate of inflation, strong gains in corporate profits, and a burgeoning export sector, has renewed demand for U.S. goods. The declining dollar has also heightened the attractiveness of "made-in-USA" products. Through June of this year, U.S. exports to Belgium were $2.7 billion, or 11 percent higher than the same 1985 period. For the full year, U.S. exports should continue at this six-month performance.

The Belgian economy is expected to show real GNP gains of 1.5 percent this yar and 2 percent to 1990. Consumer prices, up nearly 10 percent as recently as 1982, should rise less than 3 percent this year and only 1.5 percent in 1987. Lower inflation will help Belgian exports expand by 3 percent and contribute to a current-account surplus of $17 billion this year. Capital investment rose 10 percent last year and is expected to show an 8 percent increase in 1986. Corporate profits, assisted by declining business taxes, will continue to grow, but not at the 14 percent rate registered in 1985.

The unemployment rate was 12.5 percent for 1985, down for the first time in 14 years, but remains the major intractable problem facing the country. The new government will continue austere economic policies emphasizing new job creation and deficit reduction. Current plans are to reduce the deficit to 8 percent of GNP by 1987.

Economic growth will increase demand for U.S. manufactured goods that will help modernize and automate Belgian industries. Some of the product sectors expected to have the best prospects for U.S. companies include telecommunications, robotics, computer software, security and safety equipment, and lasers.

COPYRIGHT 1986 U.S. Government Printing Office
COPYRIGHT 2004 Gale Group