Country Profiles

Access to latest commentary on timber industries and economies of EU and VPA partner countries

KEY EU COUNTRY

BELGIUM

Last updated on 21 April 2022

General Economic Trend

The Belgian economy bounced back strongly in 2021, according to the Winter 2022 European Economic Forecast (EEF). After GDP contracted 5.7% the year before due to lockdown and other health crisis brakes on business, the country returned to pre-Covid levels of activity in Q3 2021. As a result of a spike in infections, renewed pandemic restrictions, supply side constraints and high input prices, Q4 growth slowed to just 0.5%, but this still left GDP ahead 6.1% for the year.

The economy was driven in particular by a resurgence in household expenditure as pandemic controls gradually eased through 2021, leading to improved performance in hospitality, culture, leisure and tourism sectors. Non-durable goods sales and services spending also rose 5% and while business investment remained depressed, down 2.4%, government consumption spending rose 3.8%.

Economic headwinds continued to pick up from Q4 2021 into Q1 2020, with the deterioration in the health situation and hikes in energy costs denting consumer confidence. While business investment was restrained by rising input prices and supply bottlenecks however, the national business sentiment indicator, although off its peak, stabilized at quite a high level. Housing investment also continued to increase, albeit more modestly than months previously.

Employment is forecast to grow by a further 37,000 jobs in 2022, following the 86,200 increase in 2021, helping reduce unemployment marginally to 6.1%.

Inflation is expected to rise in 2022, peaking at 3.8% due to increased energy prices and global supply chain disruption. But the Louvain University Economics Institute predicts it will fall back to 1.1% at the year end. The EEF forecasts Belgium’s Harmonised Consumer Price Index to reach 4.3% before falling strongly in 2023 to 1.3%

Most forecasts point to Belgium continuing to run a high budget deficit, with the EEF predicting 4.9% of GDP in 2023, the highest in the EU.

However, household spending is expected to continue to drive economic momentum, with the National Bank expecting average purchasing power to increase 7.1% from 2022 to 2024. The EEF says Belgium’s Recovery and Resilience Facility, easing supply side constraints and energy transition will add further impetus to investment.

Consequently GDP, predicts the EEF, will grow a further 2.7% in 2022. This will be among the slower growth rates of the EU 27, but still above historic averages. Growth is then expected to ‘return to its long-term trend’ at 2.2% in 2023.

Timber Industry

Construction

The fortunes of Belgian construction improved strongly in 2021 – although market conditions are expected to remain challenging for the sector going forward.
Output fell 4.7% in 2020 due to the health crisis and it remained affected by lower order volumes and project delays in Q1 2021. However, from Q2 both residential and infrastructure activity both recovered and overall the sector was expected to grow 7% for the year. Belgian statistical office Statbel reported the number of residential building permits issued up 14.1% to 24,383 buildings in the first nine months.
However, long-term issues are still reported to be holding back the industry’s potential. It is highly fragmented and consequently very competitive, so, despite increased demand and full order books, margins remain low. Businesses are also facing higher commodities costs and rising labour rates, plus limited availability of new building sites. 80% of the sector report continuing materials shortages too.
The result, said forecasters would be a rise in insolvencies from the end of 2021 into 2022 and increasing pressure for consolidation, with winding down of government fiscal support measures adding to problems.
The sectors seasonally adjusted construction production index was down 3.7% in November 2021 on October, while the calendar adjusted index was down 8.8% on November 2020.

Furniture

The key Belgian furniture industry suffered less of a reversal due to the pandemic than expected. It was hard hit in Q1 and Q2 2020 as the initial lockdown resulted in retail shutdown. However, as in much of the rest of the world, Belgian consumers confined to their houses and having to work from home, started to spend more on upgrading their properties, investing money saved from not taking vacations or spent on leisure. The RMI boom also resulted in increased expenditure on furniture as part of householders renewal, remodeling and upgrading of interiors.
Manufacturers also drew on government fiscal support, including its job retention grant scheme which enabled them to keep their employees on through the worst of the crisis.
As Covid-safe work practices permitted, they increasingly cranked up output through Q3 and Q4 2020 and as a result the sector’s turnover for the year was €2.067 billion, just 1.2% down on 2019.
Recovery accelerated strongly into 2021, with turnover up 25.6% in the first six months to €1.179 billion – that also put it 12.1% ahead of the total for the first half of 2019. Price rises resulting from higher materials costs certainly helped boost manufacturers’ figures, but growth was largely attributed too healthy consumer demand as the home improvement boom continued.
Household furniture was the strongest performer in this period, with sales up 29.5%, while . kitchen furniture sales were up 22%. There was recovery in office furniture and shop fittings too, with demand ahead 16% on the first half of 2020, however this still left turnover in these sectors below 2019 levels.
On the back of overall growth, furniture sector investment in the first half of 2021 hit €38.8 million, an increase of 24.5% on the same period of 2020.
To capitalise on rising consumer confidence levels and help ensure continued growth, timber, furniture and textiles sector federation Fedustria launched a promotional campaign, urging the public to buy Belgian furniture and interior design solutions.
As foreign markets, notably in the rest of the EU picked up the economic pace, Belgian furniture exports rose strongly too. For the first half of 2021 they were up 24.6 % on the same period of 2020, reaching €861 million. The EU accounted for 89.5% of this total, with exports to Belgium’s leading foreign market France ahead 37.5% and to Germany 39.1%. Sales to the Netherland decreased by 10.9%, but those to Italy and Ireland also saw strong growth and, despite the extra administrative burden of selling to the UK post Brexit, Belgian exports there almost doubling in the first half.
Reflecting the buoyancy of the market, Belgian furniture imports increased too, up 39.5% to a total of €957 million. Imports from the rest of the EU were ahead 29.5%, with the Netherlands, Germany and Poland the lead suppliers. But imports from China grew still faster, up 73.1% to €160.5 million, while those from Turkey increased 31%. Imports from Indonesia, India and Vietnam are still relatively small, but all put on double digit growth in the first half of 2021.
As the international market continues to recover, Belgian furniture exports are forecast to grow in volume too, up 7% for the whole of 2021 and 5.7% in 2022.
Rising materials and components costs are predicted to continue to weigh on Belgian furniture manufacturers and they are not expected to pass these on fully to customers. As a result, growth in the sector was expected to decelerate into 2022. However, it was still reported to be positive about prospects overall and continuing to invest in production and product development.

Tropical Timber Imports & Trade

The combination of logistical disruption and business lockdown depressing consumption in the worst of the health crisis in the first half of 2020 resulted in significant drops across the board in Belgian imports of tropical timber and wood products. As the year progressed, however, and Covid business and social restrictions eased, demand picked up. Consequently while import totals of most product categories were down on 2019, they were not as depressed as expected. The Belgian economic recovery accelerated through 2021 and timber consumption rose accordingly, however, developing supply issues increasingly hampered trade in some key products, notably tropical plywood.

The cladding and decking markets were particularly strong, boosted by the surge in the Belgian repair, maintenance and improvement and DIY businesses. IMM survey respondents reported supply outstripping demand for some products , with prices consequently rising sharply – ipé and meranti decking, for example, doubled in price, reaching €1,400/m3. More customers pre-ordered product, with some said to be asking for three times their normal orders. Price inflation was also fed by soaring freight rates. Asia was worst affected, leading to increased demand for African decking and cladding hardwoods. The buoyant market also saw relatively new products making an impact, including thermally treated fraké and ayous.

The strong RMI market and recovery in Belgian construction also saw a surge in demand for plywood. Importers, in fact, said they’d made up for the downturn in first half 2020 in the second half and orders continued to climb into 2021. However, said IMM respondents, supply became increasingly ‘complicated’. Prices rose accordingly, averaging increases of 10-20% in the first half of 2021, with Russian up 30%. And again high freight rates drove inflation, impacting Malaysian and Indonesian product in particular. The combination of factors, freight disruption and cost, prices eventually persuading customers to rein back orders, and ongoing disruption to production due to Covid actually resulted in tropical plywood imports declining. In the first nine months of 2021 they were just, 4,705 tonnes. That was down 60% on the 2020 total, with importers seeing little prospect of the shortfall being made up in the last three months of the year.

Tropical builders and joiners carpentry (BJC) trade was afflicted by similar problems, with respondents commenting that their imports from SE Asia had virtually dried up due to renewed Covid restrictions, freight disruption and high container prices. Overall tropical BJC imports stood at 8,375 tonnes for the first nine months of 2021, down 40% on 2020’s total.
Importers said they had also generally stopped buying cheaper wood products from Asia as the margins didn’t cover freight rates.

Looking forward, the ban on log exports agreed by members of the Economic and Monetary Community of Central Africa (CEMAC) was raised by IMM survey respondents. While its introduction has been deferred until 2023, importers said they expected some countries to bring in controls before that. In fact, it was suggested that the 25% increase in Belgian log imports from the Republic of the Congo in the first nine months of 2021 was the result of companies anticipating this. Some Belgian importers are geared up to processing logs themselves to give them greater control of sawn product quality and availability and it is thought the ban will lead to shortages in Congo Basin supply as African mills are already at full stretch and will need develop capacity to handle the increased log volumes they will have. Another prediction is that the ban will lead to more inward investment from China in processing in the Congo Basin to secure its hardwood supplies.
Another issue of concern raised by Belgian importers, albeit not solely affecting tropical imports, was the increasing involvement of customs authorities in EUTR implementation. They are reported to have stepped up checks, generally raised the level of scrutiny and required more documentation. To ensure a level playing field, some respondents suggested greater use of customs in enforcing the EUTR EU-wide.

Trade with VPA Partner Countries

Overview

Overall Belgian imports of forest products, including pulp and paper, from FLEGT VPA countries recovered strongly through 2021 as the Covid restrictions relaxed and the economy gathered pace. According to the IMM Data Dashboard, they totaled €461 million for the year, an increase of over 21%. Within this figure, wood and furniture imports were worth €418 million, up 26% on 2020.

As with tropical timber overall, demand was reported by IMM survey respondents being driven by the strong performance of the Belgian repair, maintenance and improvement and DIY sectors, which started in 2020 and persisted through 2021. The recovery in construction was another factor cited behind the upturn in imports.

The lead product from VPA countries was sawn hardwood, with imports up from €157 million to €200 million, followed by other wood furniture, up from €53 to €78 million. Next came wood seats, with imports increasing from €22.6 million to €29.7 million, wood joinery up from €19.7 million to €20 million and wood mouldings, up from €13.7 million to €15.5 million.

Hover over the chart to see exact data

Belgium – VPA partner country trade January-December 2021 (in €)
Source: IMM Data Dashboard

Trade with Top 5 VPA Partners

Imports from the top five VPA suppliers to Belgium totaled €355 million in 2021, up from €276 million in 2020. Indonesia overtook Cameroon, as the lead supplier, and they were followed by Gabon, Viet Nam and Republic of the Congo.

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Belgium – top 5 VPA partner trade 2020-2021
(3 month rolling averages; HS44, HS47, HS48, and HS94 products)
Source: IMM Data Dashboard

Hover over the chart to see exact data

Belgium – top 5 VPA partner trade 2020-2021
(HS44, HS47, HS48, and HS94 products)
Source: IMM Data Dashboard

Indonesia

While Indonesia’s exports to Belgium recovered well from 2020 when pandemic hit both supply and demand, importers said the rate of growth was limited by high freight rates and manufacturers struggling to increase production due to continuing Covid infections and disease safe work practices. One respondent said due to high container rates they halted trade with Indonesia and Malaysia. Imports of plywood were particularly hard hit both by container costs, long lead times and difficulty in securing order volume. In the first nine months, they were down 60% on the 2020 year total. Importers said Indonesian product was becoming more competitive as prices of Elliotis from Brazil rose sharply, and imports picked up significantly in Q4, but were still marginally lower for the year. Mouldings were also hard hit, with imports down 35% in the first three quarters. Higher value items were clearly less affected however, and Indonesia consolidated its position as Belgium’s lead supplier of tropical timber furniture, with imports of other furniture and wood seats combined up 51%.

According to the IMM Data Dashboard, Belgium’s total imports, including pulp and paper, from Indonesia rose from €103 million in 2020 to €124 million in 2021. Wood and furniture imports were up from €74 million to €101 million. Other furniture imports were up 48% at €49 million, furniture seats 72% at €19 million, mouldings 7% at €6.5 million and charcoal 18% at €6.4 million. Plywood imports were down 1%

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Belgium – Indonesia trade of top 5 wood products since 2019
(3 month rolling averages; HS44, HS47, HS48, and HS94 product)
Source: IMM Data Dashboard

Hover over the chart to see exact data

Belgium –  Indonesia trade 2020-2021
(HS44, HS47, HS48, and HS94 product)
Source: IMM Data Dashboard

Cameroon

While the ban on log exports from CEMAC members has been delayed until 2023, Belgian importers expect countries, including Cameroon to ‘introduce it step by step by species’ through 2022. Consequently log order volumes are expected to rise in coming months to pre-empt this move. In 2021, Belgian log imports from Cameroon were not huge, but were up 31% to €1.12 million.

Cameroon remains by some way Belgium’s lead supplier of sawn tropical hardwood supplying 46% of its total imports. In 2021 its Belgian sales rose 16% to €92.3 million. Logs were its next biggest export, as stated up 31%, followed by mouldings, up 14% at €1.03 million, joinery up 4.6% at €181,000 and veneer, down 51% at €104,000.

Interestingly, one Belgian operator told the IMM they’d decided to invest in a ‘second and third transformation’ plant in Yaoundé. They felt this was more sustainable than importing less processed timber and enabled them to offer lead times to European customers of just two weeks.

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Belgium –  Cameroon trade of top 5 wood products since 2019
(3 month rolling averages; HS44, HS47, HS48, and HS94 product)
Source: IMM Data Dashboard

Hover over the chart to see exact data

Belgium – Cameroon trade 2020-2021
(HS44, HS47, HS48, and HS94 product)
Source: IMM Data Dashboard

Gabon

Gabonese exports of timber and wood products to Belgium recovered strongly in 2021, up by 28% to €74.3 million. Sawn timber remained by some stretch it’s lead product, with exports up 37% at €59 million. The next in value, up 74% to 6.08 million, were mouldings, bearing out their view, said Belgian importers, that Gabon is among the central African leaders in advancing further processing. Sleeper exports, obviously dependent on Belgian infrastructure spending, fell 26% to €5.83 million, while exports of plywood, described by Belgian importers as the best quality in West Africa, rose 47.5% to €1.075 million and veneer exports fell 21% to €1 million.

One issue with sourcing from Gabon was reported as its continuation through 2021 of Covid restrictions longer than neighbours, leading to contracts being delayed.

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Belgium – Gabon trade of top 5 wood products since 2019
(3 month rolling averages; HS44, HS47, HS48, and HS94 product)
Source: IMM Data Dashboard

Hover over the chart to see exact data

Belgium – Gabon trade 2020-2021
(HS44, HS47, HS48, and HS94 product)
Source: IMM Data Dashboard

Viet Nam

Vietnamese wood products exports to Belgium also rebounded strongly, ahead 26% at €44.14 million. Leading the way was other wood furniture, up 45.6% at 23.3 million, followed by wood seating, up 3% at €9.47 million, joinery, up 3.6% at €8.5 million (consolidating the country’s status as Belgium’s lead tropical builders joinery and carpentry supplier), plywood, up six fold at €1.04 million and prefabricated buildings, up 157% at €715,000. While Viet Nam’s plywood sales increased last year, Belgian importers said they had still greater potential to grow volume, but were currently handicapped by quality and price.

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Belgium – Viet Nam trade of top 5 wood products since 2019
(3 month rolling averages; HS44, HS47, HS48, and HS94 product)
Source: IMM Data Dashboard

Hover over the chart to see exact data

Belgium – Viet Nam trade 2020-2021
(HS44, HS47, HS48, and HS94 product)
Source: IMM Data Dashboard

Malaysia

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Belgium – Malaysia trade of top 5 wood products since 2019
(3 month rolling averages; HS44, HS47, HS48, and HS94 product)
Source: IMM Data Dashboard

Hover over the chart to see exact data

Belgium – Malaysia trade 2020-2021
(HS44, HS47, HS48, and HS94 product)
Source: IMM Data Dashboard

Perception of FLEGT

Customs continue to scrutinise FLEGT-licensed product

IMM survey respondents repeated their complaint from last year, that Belgian customs are putting FLEGT-licensed timber and wood products through unnecessarily high levels of scrutiny, when they should be allowed a due diligence-free passage into the country.

Importers attributed this to a lack of understanding of the import status of FLEGT-licensed goods.

Another ongoing grievance involves customs reportedly maintaining that some products categorized HS 4409 on FLEGT Licences, making them duty-free, should be categorised HS 4407, in which case duty is levied. Some companies say they’re being pursued for back payment of duty as a result and the fact that 36% of survey respondents said FLEGT licensing was leading to delays in customs is partially attributed to this issue.

How aware are you of the FLEGT VPA process and what it involves? (n=15)

%

Fully aware

%

Partially aware

%

Totally unaware

Trade Awareness and Opinion of FLEGT

Awareness of FLEGT licensing in the Belgian import trade grew once more last year, according to the IMM annual survey. In fact 100% of respondents said they were fully aware of the process, against 87% in 2020. The findings of the survey this year, however, did not indicate whether knowledge of FLEGT was growing further down the supply chain, as 100% of respondents categorized themselves as operator importers.

The Belgian Competent Authority reported processing 2613 Licences for furniture imports and 764 for timber and other wood products and 79% of survey respondents said the procedure was ‘easily understandable and manageable’, while the same percentage also agreed FLEGT licensing made importing from Indonesia easier.

As for the FLEGT VPA process having aspects that assured forest management and timber sustainability, 44% of survey respondents felt it did not, but the same percentage thought it did. Moreover, 57%, the same percentage as last year, felt FLEGT Licences should be considered evidence of sustainability in timber procurement policies.

At the same time, 43% continued to give preference to FSC and PEFC-certified product over FLEGT-licensed, with comments including the fact that these provided a price premium and more wide-ranging assurance, including on social and ethical issues. Just 14% said they did not give certified timber preference.

Survey respondents, however, agreed more should be done to raise awareness of what FLEGT entails among specifiers, policy makers and also consumers.

survey result 2022 - Belgium