The Belgian economy has plunged into a historically deep recession, driven by the crisis in the financial sector and a sharp contraction in world trade. The government has reacted swiftly to restore confidence in the financial sector. Monetary easing by the European Central Bank has been coupled with a fiscal stimulus to support economic activity. Nevertheless, the economy is unlikely to recover strongly within the next couple of years. While the preceding period of high growth benefited from structural reforms, it also revealed weaknesses. Thus, bad times should not be used as an excuse to postpone structural reforms necessary to foster potential growth. Structural reforms should aim at making the labour market more flexible and raising productivity growth through improving the tax system and the competition policy framework. The other main challenge is to put public finances on a sustainable path as soon as the economy picks up in order to cope with costs of ageing.