Banque nationale de Belgique : Belgian firms see 2021 as a transition year, while prospects for 2022 are more encouraging

Firms are not expecting any substantial recovery of their turnover before 2022, while 2021 is shaping up as a transition year

The expected loss of turnover due to the coronavirus crisis for the year 2021 is 9 %, as in the December survey. So, this is only a very small improvement compared with the current expected loss of turnover, which comes to 12 %. Despite the very rapid development of vaccines against COVID-19, the vaccination campaign will take time. It is therefore becoming increasingly evident that the health situation in Belgium and abroad, as well as the restrictive measures will continue to weigh on corporate turnover for quite some time to come. The recovery of their turnover anticipated for 2022 is more solid, since the loss of turnover is estimated at 4 % for next year. Moreover, this is an upward revision by 2 percentage points on the expectations voiced in the December survey. So, companies believe that 2021 will be a transition year, with only moderate growth of turnover, and that 2022 will be the year when their revenue will pick up at a stronger pace (even though it will still be below the norm for the year as a whole, according to survey respondents).

A similar trend can be observed when it comes to investment plans. The average company surveyed is expecting its investment to be 19 % below the norm in 2021, which is only very slightly better than the drop in investment in 2020 mentioned in the last survey.^[2] In the January survey, a question focusing on investment plans for 2022 was asked for the first time and, for that year, a reduction of ''only'' 11 % on account of the coronavirus crisis was reported. So, that would point to significant growth in investment between 2021 and 2022.

Many self-employed and small firms are still facing cash-flow problems and a high risk of bankruptcy, even though a lot of them have already injected extra capital

This month, a new question was added to the survey about recourse to additional sources of finance since the beginning of the coronavirus crisis. One-third of the firms questioned stated that they had resorted to at least one, event to several additional sources of funding. They were principally capital injections by company bosses, by members of their family or from friends (in the case of 15 % of all respondents), wider recourse to bank loans (12 %) and an extension of deadlines for paying suppliers (8 %). To a lesser extent, intra-group financing (3 %) and shorter payment deadlines given to customers (2 %) were also flagged up, while a capital injection by a public or private investment firm or by another enterprise was hardly mentioned at all.

Recourse to additional sources of finance depends heavily on the sector of activity and company size. The proportion of firms that had benefited from extra capital is much higher in the most badly affected sectors, namely accommodation and food services (62 % of respondents), the arts, entertainment and recreation sector (56 %) and the transport and logistics sector (52 %). The type of funding source also depends considerably on the size of the firm. One in every four self-employed people and one in every five companies employing a maximum of ten people said they had enjoyed a capital contribution from the own funds of the company bosses, their family or friends. On the other hand, wider recourse to bank loans was mentioned by medium-sized enterprises (25 % of medium-sized enterprises questioned), while intra-group financing was important for very large enterprises (18 % of all firms surveyed with more than 1000 employees).

^{[2] In calculating this average, we do not take account of company size. As large enterprises on average declare a smaller drop in their investment, the overall decline in investment is lower.}