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March 2019 - Drivers of economic growth in 2017

Brussels Institute for Statistics and Analysis (BISA) - Contribution of the sectors to Value Added Growth in the Brussels-Capital Region in 2017

An initial estimate by the Institute for National Accounts (INA), points to a 0.9% rise in economic activity in the Brussels-Capital Region in 2017. Which sectors contribute to this growth?

 

Contribution to Value Added Growth in the Brussels-Capital Region in 2017 (in volume, in percentage points)
 

Source: Institute for National Accounts (INA), calculated by BISA
 

In 2016, the volume of economic activity in the Brussels-Capital Region was virtually the same as in 2011 (figures adjusted for inflation). Average growth was therefore zero in the 2012-2016 period. This period was marked by several years of stagnation (2012 and 2016) and recession (2013 and 2014). Preliminary figures recently published by the NAI (see box) suggest that in 2017 economic growth has accelerated to reach 0.9% in Brussels.
 

Which sectors contributed most to this growth?

The following analysis compares the contributions of the main sectors to the growth observed in 2017 (see box) with their average contributions in the preceding five years (the 2012-2016 period).
 

The three largest contributions to growth come from service industries, mainly those providing services to businesses

These three 'drivers of economic growth' also bolstered growth in the Brussels economy in the 2012-2016 period.

  • According to the preliminary figures, scientific and technical services have made a major contribution to the growth of economic activity in 2017: 0.52 percentage points (pp) for a total growth of 0.9%. . In other words, this sector accounts for 60% of economic growth in the Brussels-Capital Region. It supported growth in the 2012-2016 period (with an average contribution of 0.07 pp) and performed even better in 2017. This sector’s biggest growth areas were accounting, consultancy and business management.
  • In second place come administrative and support services. This sector made an important contribution to economic growth of +0.28 pp in the Brussels-Capital Region in 2017, representing one third of the overall growth in Brussels. It was also a strong driver of economic growth in the 2012-2016 period (with an average contribution to growth of +0.15 pp per year). The sector includes amongst others security and cleaning companies.
  • With a contribution to growth of +0.21 pp, the information and communication sector emerged as Brussels’ third largest driver of economic growth in 2017,accounting for a quarter of this growth. This comes as no surprise, as the sector also strongly supported growth in the 2012-2016 period (with an average contribution of +0.25 pp per year). The growth in 2017 and during the 2012-2016 period was mainly due to the Telecommunications subsector.
     

A number of other sectors have supported growth to a lesser extent in 2017

Education supported the growth of the Brussels economy with a contribution of +0.15 pp in 2017. Performance in this sector was slightly less dynamic in 2017 than during the 2012-2015 period (growth contribution of +0.24 pp per year on average).

In recent years the real estate business also made a significant positive contribution to growth (+0.15 pp per year on average in the 2012-2016 period). But in 2017 the contribution was limited to 0.06 pp. Regarding the activities of the sector, this sector is unusual in that it also extends to “residential services”, that is the rent paid by tenants, and, in the case of home owners, the amount they would pay if they rented their homes.

Financial and insurance services made a zero contribution in 2017. This is actually an improvement, as the sector had made a significantly negative average contribution to economic growth in previous years (-0.43 pp). The sector represents an important part of the value added in the Brussels-Capital Region (18%), which means growth in this sector soon has a major impact on the total value added for Brussels.
 

Two sectors represented a significant drain on the growth of the Brussels economy in 2017

In 2017, trade continued to decrease in Brussels in keeping with the previous five years, with acontribution to growth of -0.30 pp. The rate of contraction in 2017 is very close to the average for the five preceding years. In the 2012-2016 period the sector made an average contribution to growth of -0.34 pp.

The energy sector also continued to decline in 2017 (contribution to growth of -0.32 pp). In 2017, the sector declined much faster than the average for the preceding five years (average contribution of -0.11 pp per year).

 

Method

This analysis uses the value added in volume published in February 2019 by the Institute for National Accounts Institute (INA) in the context of the Regional Accounts.

  • Value added is a measure of value creation over a given period in a given area. More specifically, in the context of this analysis, value added measures the value of all goods and services produced in the Brussels-Capital Region in one year minus the value of the intermediate goods and services used in the production process.
  • It is expressed as a volume. This means that the evolution of prices do not play a role in the series. All values in the series were converted to 2016 prices in this analysis, keeping the price level constant.
     

The economic growth of the Brussels-Capital Region can be seen as the sum of contributions of the various sectors that take part in the overall economy. A sector’s contribution to growth depends on both the sector’s relative weight in the total economy and the dynamics of its own growth.

The results published for the most recent year (in this case 2017) are based on a provisional method that takes into account the evolution of employment in each sector between 2016 and 2017. When more sources become available for 2017, a definitive method will be used to recalculate the results. These reviews may strongly modify the results.

 

 For more information

Please see the theme 'Economy'.