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The cyclically adjusted balance
According to the Federal Planning Bureau's
estimates, the Belgian economy's potential growth in the medium term
fluctuates around 2%. Global labour productivity is expected to make up
the bulk of it. Initially, the impact of the factors of labour and
capital is almost the same, but in the coming years, the importance of
the labour factor is likely to diminish because of the impact of
population ageing.
Despite the strong growth in GDP recorded in 2007,
the estimates used in this case point to a slightly negative output gap.
In the following years, estimated growth will fluctuate around potential
growth, so that for the whole period under review, the cycle will
continue to have a negative impact on the primary balance and on the
federal government's overall balance. At the end of the period, the
cyclically adjusted balance virtually catches up with the real balance.
TABLE 6
Output gap and cyclically adjusted balance |
|
% of GDP |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
|
1. Real GDP growth |
2,8 |
2,7 |
1,9 |
2,0 |
2,0 |
2,0 |
|
2. Net lending of general government |
0,3 |
-0,2 |
0,0 |
0,3 |
0,7 |
1,0 |
|
3. Interest expenditure |
4,0 |
3,8 |
3,7 |
3,5 |
3,4 |
3,3 |
|
4.
One-off and other temporary measures |
0,7 |
-0,1 |
0,0 |
0,0 |
0,0 |
0,0 |
|
5. Potential GDP growth |
2,3 |
2,3 |
2,1 |
2,0 |
2,0 |
1,9 |
| |
Contributions: |
| |
-
labour |
0,6 |
0,6 |
0,4 |
0,3 |
0,3 |
0,3 |
| |
-
capital |
0,7 |
0,6 |
0,6 |
0,7 |
0,7 |
0,7 |
| |
-
total factor productivity |
1,0 |
1,0 |
1,0 |
1,0 |
1,0 |
1,0 |
|
6. Output gap |
-0,7 |
-0,3 |
-0,3 |
-0,3 |
-0,2 |
-0,1 |
|
7. Cyclical budgetary component v |
-0,4 |
-0,2 |
-0,2 |
-0,2 |
-0,1 |
-0,1 |
|
8. Cyclically adjusted balance (2-7) |
0,7 |
0,0 |
0,2 |
0,5 |
0,8 |
1,0 |
9. Cyclically adjusted primary balance
(8+3) |
4,7 |
3,8 |
3,8 |
4,0 |
4,2 |
4,3 |
|
10. Structural balance (8-4) |
0,0 |
0,1 |
0,2 |
0,5 |
0,8 |
1,0 |
In order to switch to the structural balance, the
non-recurring measures also need to be taken into account. A number of
one-off measures envisaged for 2007 (sale of buildings, pension fund
takeovers) were not implemented. The impact of a series of other one-off
measures (levy on thirteenth month pay in cases of termination of
contract, reduced taxation on the withdrawal of certain reserves) is
more than cancelled out by the negative impact of measures decided
previously (securitisation) and by the exceptional repayments of taxes
collected in previous years. In the end, the impact the non-recurring
measures foreseen in 2007 is slightly negative. For 2008, the initial
budget contains no major one-off measures. On the other hand, account
has been taken of the sale of disused buildings or military equipment,
in each case for relatively minor amounts. The limited impact of these
measures is wiped out by the negative impact of earlier measures.
Roughly speaking, the impact of these one-off measures can be expected
to be budget neutral. The structural balance therefore matches the
cyclically adjusted cycle.
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