GDP growth revised upward
The Dutch economy is growing faster than expected. In the fourth quarter. GDP improved by 0.8% on a quarterly basis. instead of 0.5% as had previously been reported. bringing average GDP growth for 2014 to 0.9%. If it had not been for the reduction in gas production and mild winter. the growth rate could even have been half a percentage point higher.
International trade remains an important contributor. with exports likely to increase further in the course of the year. Companies are benefiting from the weaker euro as well as the global recovery. Business confidence is also boosted by lower oil prices and falling interest rates. both of which have reduced production costs.
Companies are hiring more staff. although preferably on flexible contracts. 1 July will see the introduction of the Work and Security Act. which allows flexi workers to secure a permanent contract quicker and makes it easier and less expensive for employers to lay off permanent staff. It is uncertain therefore whether the flexibilisation trend will continue as strongly as in the past.
The growth in jobs has made consumers feel more positive. Consumer confidence is at its highest level in over seven years. Optimism is also supported by rising share prices and increased spending power driven by low inflation. Finally. the recovery of the housing market is contributing to consumer confidence.
Increased consumer spending and business investment are boosting domestic consumption and imports from abroad. Although imports are growing faster than exports. the current account surplus remains high. At well over 10% of GDP. it exceeds EU guidelines by quite a bit. However. the European Commission is not making an issue of it.