Company turnover starts to recover but the outlook for the Belgian economy remains grim

Companies surveyed point to a 26 % drop in turnover compared with pre-crisis levels, 5 percentage points better than the previous survey and the best result since the first survey carried out at the end of March. This improvement is mainly due to the trade and building sectors, while the situation is still critical in the catering and accommodation and arts, entertainment and recreation sectors. These are the main findings from the ERMG (Economic Risk Management Group) survey carried out last week. For the foreseeable future, a return to normal is not on the cards yet. Six out of every ten firms questioned expect to see a reduction in their employment between now and the end of the year and seven out of eight companies do not think they will get their turnover back up to pre-crisis levels in the third quarter. The outlook for the Belgian economy thus remains gloomy.

A new survey was conducted last week by a number of federations of enterprises and the self-employed (notably, BECI, SNI, UNIZO, UWE and VOKA for this latest survey), the eighth wave of the survey since the end of March. This initiative coordinated by the NBB and the FEB/VBO aims to assesses the impact of the coronavirus crisis on economic activity in Belgium and on the financial health and decision-making of Belgian companies. In all, 2 993 enterprises and self-employed people replied to this eighth survey[1].

[1]    Participation in the survey by some federations whose members operate in a specific sector of activity may lead to sampling errors. For instance, companies from one by branch of activity could be strongly represented in our sample but not actually have much weight in the economy as a whole. The sample by branch of activity is therefore stratified depending on the weight in value added in Belgium.

Table ERMG1

Company turnover has picked up since the last survey

The firms surveyed indicated a 26 % drop in turnover from pre-crisis levels when taking account of company size and the weight of the branches of activity in value added in Belgium. For the first time since this survey began to sound out firms on the coronavirus crisis, the reported fall in turnover that it has caused has come down significantly below the 30 % mark. More generally speaking, an improvement seems to have begun over the last three waves of the survey, which corresponds to the first stages of deconfinement.

This week, companies questioned from two sectors in particular point to a definite recovery in their sales: construction and trade. These two sectors have exceeded the national average for the first time and now feature among the sectors least affected by the coronavirus crisis over the last week (if the build-up of past losses is disregarded). For instance, construction sector firms indicated a 14 % drop from their pre-crisis situation, compared to a 34 % drop reported in the previous survey round and an average drop of 42 % on the first six surveys. It is also worth noting that companies questioned from the real estate activities sector also reported a clear improvement this week, but these are only based on a very small number of respondents, so they should be interpreted with caution.


Firms questioned from the retail trade sector reported a drop in their turnover of around 16 % from pre-crisis levels, whereas they pointed to a 36 % decline in the previous survey and a 51 % drop in the first six waves of the survey. Companies surveyed in the non-food retailing sector, where sales had bounced back two weeks ago, have not recorded any major change this week. Conversely, companies working in food retailing and the wholesale trade indicate a clear improvement in their sales this week, with growth rates of respectively +1 % (compared with -16 % in the previous survey) and -17 % (compared with -43 % in the previous survey) on pre-crisis levels.

As in previous surveys, the two most hard-hit sectors are still the arts, entertainment and recreation sector and accommodation and food service activities. On average since the end of March, these two branches of activity have reported losses of sales turnover of respectively 86 % and 89 % compared to pre-crisis levels. This week is no exception and the accumulation of more than two months of losses of around 90 % will very probably leave an indelible mark on the financial health of firms in these sectors and on their employment levels.

The degree of concern among company managers is diminishing but the risk of bankruptcy and liquidity problems remain worrying  

The degree of concern expressed by firms and measured on a scale of 1 to 10 has come down from 6.7 two weeks ago to 6.6 this week. A constant improvement has thus been observed since the end of April and this is in line with the federal government’s various announcements clarifying the stages of deconfinement. Sectoral differences have nevertheless been observed, notably with a higher degree of concern in the arts, entertainment and recreation (8.9), catering and accommodation (8.1) and transport and storage (7.9) sectors. 

Cash-flow problems do not seem to have changed a lot since the previous survey as 27 % of all firms questioned say they cannot maintain their liquidity position for more than three months against a figure of 25 % in the last survey. However, a clear improvement is observed on the average figure for the first six waves of the survey (36 %). Cash-flow problems are still the highest in the catering and accommodation sector as well as in the arts, entertainment and recreation sector, where more than one in every two companies has said they would not be able to hold their cash-flow position for more than three months.

The perception of risk of bankruptcy has remained at the same level as in previous surveys: 8 % of surveyed firms say bankruptcy is likely or very likely. This percentage is still the highest in the arts, entertainment and recreation (24 %) and catering and accommodation (20 %) sectors and has gone up in the transport and storage sector (19 %).  

Forecasts remain pessimistic, both for turnover and employment in the private sector

Companies’ expectations about their business activity in the near future are of utmost importance, not least for assessing the strength of the recovery of economic activity. This week, two questions were asked from this perspective.

The first one concerns employment forecasts in the firms surveyed (“How do you see the number of employees in your company changing between the pre-crisis situation and the end of the year?”). Taking account of the size of the firms questioned in terms of employees and number of employees per branch of activity, six out of ten surveyed firms are looking at a reduction in employment and just under four out of ten companies questioned point to stable employment. Only 4 % of the companies surveyed said they are planning to expand their staff numbers.

Based on these findings and the sectoral breakdown of salaried employment in the private sector in Belgium, the drop in private sector employment (excluding the self-employed) in Belgium, which accounts for almost 7 % of private sector employment, is estimated at just over 180 000. It should be noted that this assessment of the impact on employment in the private sector is virtually identical to that found in a previous survey which asked about the number of workers on temporary lay-off who could be made redundant. A large chunk of this drop in employment (48 000) is in retail trade as companies questioned from this branch of activity indicate an average fall of almost 10 % and the trade sector accounts for a big share of private sector employment in Belgium. The manufacturing industry also accounts for a large part of employment in Belgium and firms questioned from this sector reported an average drop of 7 % in their salaried employment, a figure close to the Belgian average. In the catering and accommodation and arts, entertainment and recreation sectors, the decline mentioned is considerable as it concerns almost one in every four jobs, that is, respectively more than 30 000 and 7 000 people. Moreover, it should be recalled that 10 % of self-employed respondents regard the prospect of bankruptcy as likely or very likely, which could lead to even further job losses in the private sector.


The second question about expectations relates directly to turnover estimates for the coming quarter. Here too, the companies surveyed appeared to be pessimistic as only one in every eight firms is expecting to reach or exceed its pre-crisis turnover level in the third quarter. On average, when account is taken of company size and the weight of the sectors in value added, the results produce a fall in turnover from pre-crisis levels that is quite similar to that observed in this latest survey. In other words, on average, companies surveyed are not expecting any significant improvement in their turnover, and consequently not in their employment levels either, between now and October. The main reason cited by the vast majority of firms surveyed is still slack demand.