Belgian industry: a sectoral outlook

Faced with global uncertainty and structural constraints, manufacturers are rethinking their strategies.

The following sectoral overview is an extract focusing on Belgium, drawn from a Knight Frank European Research piece. The article offers a snapshot of where the challenges lie and where future growth may yet emerge.

Belgium’s industrial sector continues to face significant challenges, with manufacturing sentiment remaining subdued. Global trade uncertainty, cyclical pressures, and long-standing structural issues have contributed to weak performance across most subsectors. In contrast, services and construction have shown modest growth, highlighting the relative stagnation of industrial activity.

In 2024, industrial activity accounted for 13.2% of Belgian gross value added in current prices, with pharmaceuticals (23.0%), food (16.2%), chemicals (12.0%), and metals (10.5%) making up nearly two-thirds of the total.

Despite their size, these core sectors are not showing signs of high growth. The pharmaceutical industry, once a reliable source of stability, has been impacted by rising competitive pressure from Chinese and Indian imports, thinning product pipelines, and reduced demand linked to cuts in US humanitarian aid programmes such as USAID. The chemicals sector remains stagnant, and food processing is stable but lacks momentum.

Across the board, firms are focusing on cost containment, with investment largely directed towards reducing the environmental impact of existing production sites to meet regulatory requirements. This reflects a broader shift towards compliance-driven investment rather than growth-oriented innovation.

Defence-linked manufacturing stands out as a rare area of potential growth. Increased military spending has led to rising turnover and a more favourable outlook for firms in this sector. However, concerns persist about the impact of European protectionism on future sales prospects. As noted by the National Bank of Belgium, "The downturn, which began with the energy crisis and was compounded by rising interest rates, has been exacerbated by mounting uncertainty and weakening confidence."

Looking ahead, the future of Belgian industry lies in high-tech sectors capable of converting investment in technology and human capital into market-ready innovations. Yet, this transition is often hindered by excessive regulation and administrative procedures. Maintaining cost competitiveness remains essential, especially as neighbouring countries pursue similar strategies focused on quality and innovation.

Sources:

• National Bank of Belgium (BNB), Business Echo, June 2025
• KBC Economics, A Macroeconomic Look at Belgian Industry
• FPS Foreign Affairs, Belgian Economy at a Glance