The government entered the covid-19 crisis with ample fiscal ammunition and will
spread largesse far and wide to mitigate the impact of the virus. The government, a
coalition of the centre-right Austrian People’s Party and the Greens, is Europe’s first to
unite a centre-right party and an environmentalist party. With only an 11-seat majority,
it will be forced to seek support from others, including from the far-right Freedom Party,
to retain power. The economy will rally, but not by enough to offset the contraction of
2020, with weak tourism and cautious consumers holding it back.

Belgium

GDP growth: 5.4%

GDP per head: $46,150 (PPP: $53,220)

Inflation: 1.0%

Budget Balance (% GDP): - 5.1

Population: 11.6m

The parties making up the minority caretaker government, the centre-right New
Flemish Alliance and the Socialist Party, should overcome deep antipathy and assemble
a permanent coalition, if only to keep the rising far-right Vlaams Belang out of power. If
they are unable to reach agreement, fresh elections are a distinct possibility. Any
coalition will be wobbly and, once the covid-19 emergency subsides, will struggle to
agree on the direction of policy. The economy will suffer local lockdowns until mass
vaccination is available, and recovery from the deep recession will be sluggish.

TO WATCH: Degrees of separation. The governing coalition may offer more devolution
to the regions, especially in labour-market, transport and health policy, to subdue long-
simmerinng separatist tendencies.

Bulgaria