BMI View: Belgium's freight transport sector will continue rebounding in 2015, in parallel to a turnaround in the wider economy. We expect real GDP will expand by 1.3% in the next year. We expect airfreight will witness the strongest increases, driven by a ramp up in output in the pharmaceutical sector as well as from demand for high value consumer goods. Both road and rail freight will register tepid growth due to small increases in heavy industry output. Overall, road freight will continue dominating the sector in terms of overall freight volumes.
We expect Belgium's real GDP growth will continue at a pace similar to the one seen in 2014, with an increase of around 1.3% expected in 2015. Over the medium term (2015-2019) we forecast the economy will expand by an annual average of 1.5%. we expect domestic demand to be the primary driver of growth, particularly private consumption. These factors contribute to our positive view with regards to Belgium's medium term trade outlook and so the potential for growth within Belgium's freight transport sector. Aside from consumer demand, high production levels for key export items, particularly manufactured goods, will serve to boost freight volumes over the medium term.
Belgium's road freight sector is set for continued growth in 2015, at a similar pace to 2014. The country's steady economic recovery will be the key driver for growth in this sector. Over the medium term we project the volumes of freight carried by road in Belgium to expand by an annual average of 2.6%. With unemployment coming down over the medium term, while lower oil prices and persistently low inflation are supporting household consumption, demand for consumer goods will increase and benefit the road haulage sector.
Belgium's rail freight sector will register tepid growth in 2015 before gradually accelerating out to 2019. Belgium's rail freight volumes are forecast to increase at an annual average growth rate of 2.3%. Steel and motor vehicle production are two of the major drivers of Belgium's rail freight volumes. Belgium's steel sector is starting to enter a period of relative stability. Having witnessed significant declines over recent years, we are now beginning to see production levels stabilising. Motor vehicle production, another driver of rail freight, with Belgium mostly assembling vehicles, is forecast to resume its decline in 2015 and so the strength of rail freight growth over the medium term will be weaker than that witnessed in the previous five years.
Belgium's airfreight is set to offer the strongest growth opportunities out of all the freight modes in 2015. Belgium boasts a well-developed airfreight sector and given its global connectivity plays a significant role in regional supply chains. A major driver of this growth is due to the pharmaceutical sector, with Belgium's pharmaceutical exports forecast to post double-digit growth in 2015, supporting our growth outlook for the country's air freight volumes. Over the medium term (2015-2019) we forecast Belgium's air freight volumes to continue increasing steadily, posting an annual growth of 3.5% on average.
Overall, Belgium's road freight sector will continue to dominate the freight mix, with over 84% of the total market share, a phenomenon we expect will continue over our forecast period through to 2019 given the established nature of the freight mode with developed highways and trans-border connectivity, which benefits supply chains. We expect rail will retain its second place with 15% of the country's freight market, however in spite of steady investment, the declining heavy industrial demand over the next few years will see its market share dwindle. Meanwhile, despite growing at a steady clip in freight terms, air will remain negligible in terms of market share.
Pan-European private equity house Argos Soditic has taken a 66% stake in SNCB Logistics, the freight division of the national railway, as part of a financial restructuring of the operator.
Brussels Airlines announced a strategic plan to further grow its cargo business, in July 2015, by partnering with Air Logistics Group (ALG) as its General Sales and Service Agent. This is expected help the company to expand its freight capacity in Africa.
Key BMI Forecasts
We forecast total road freight volumes will rise by 1.8% year on year over 2015 to reach 310.1mn tonnes.
We forecast total rail freight volumes will rise by 1.4% year on year over 2015 to reach 57.3mn tonnes.
We forecast total air freight volumes will rise by 9.2% year on year over 2015 to reach 1.1mn tonnes.
We forecast total trade value to fall by 15% in nominal terms to reach USD752,395.8mn in 2015.
The top five import partners are the Netherlands, Germany, France, US and the UK and the top five export partners are Germany, France, the Netherlands, the UK and US.