A recent report by the National Bank of Belgium has shed light on the economic performance of the Walloon provinces, revealing a concerning trend of underperformance compared to similar regions in Europe.
Despite possessing a relatively favourable competitive position, the provinces of Liège, Hainaut, and Luxembourg have struggled to keep pace economically, earning them the label of 'low and slow.' This designation is attributed to their subpar performance in terms of both prosperity and growth when compared to the average of 242 European regions over the period from 1997 to 2019.
Only Walloon Brabant stands out as an exception, boasting high prosperity and rapid growth, placing it in the 'high and fast' category. These findings underscore the challenges faced by Wallonia, despite its structural assets.
The National Bank's analysis indicates that while economic revivals are rare and resource-intensive, the transition regions, which encompass most of Wallonia, have been ensnared in a development trap for two decades, experiencing minimal progress in prosperity and growth rates lower than both the European and national averages.
Comparisons with regions in former East Germany highlight the stark contrast in growth trajectories, with the latter benefiting significantly from substantial financial injections, unlike the relatively low interregional redistribution observed in Belgium. Economically, the Walloon provinces resemble regions in southern Europe, particularly in terms of their struggle to escape the 'low and slow' quadrant.
Low private sector employment
Despite some structural strengths such as a growing labour force and favourable geographic factors, including market size and infrastructure, the provinces grapple with significant weaknesses in the labour market, education, and public finances. Notably, the high debt burden, coupled with relatively low private sector employment outside of Walloon Brabant, poses formidable challenges to the region's economic health.
Moreover, educational disparities persist, with a significant portion of the population having only completed lower secondary schooling, contributing to sluggish regional growth. While efforts to address these issues are underway, challenges such as digital literacy and poverty rates remain prominent concerns in Wallonia.
In light of these findings, the National Bank emphasises the need for targeted policy interventions, including initiatives to boost labour market participation, enhance childcare services, improve education quality, and stimulate productivity in the private sector.
These measures are deemed crucial to bolstering the economic resilience and competitiveness of the Walloon provinces, ensuring their sustainable growth and prosperity in the long term.
