Dutch Economy in Focus – Slightly lower growth

by: Nico Klene

Dutch economy – slight temporary growth slowdown

 

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Dutch economic growth weakened in the course of 2015. However, the picture appears to be somewhat distorted by the much lower gas production in the closing months of the year.

We have reduced our estimate for economic growth in 2016: from over 2% to 1.7%. This adjustment stems from the disappointing growth figure in the final quarter of last year, which is also depressing the average growth rate for 2016, and from the weakening global economy. In 2017, growth is expected to pick up again to almost 2%.

Last year, investment made a strong contribution to growth. Thanks to the economic recovery in recent years, the investment ratio has almost returned to the average level of the years before the Great Recession.

Unemployment will continue to fall steadily this year thanks to the rising number of jobs. This will be a slow process, however, as more people will venture into the labour market. Those who do not immediately find work will be added to the jobless figure.

Inflation this year may be slightly lower than last year, partly due to the oil price decline which continued until early this year. Another cause is the dollar rate: the currency is expected to be less strong than last year – and less strong than we assumed until recently.

We do not foresee a deepening slowdown for the emerging economies as a whole this year. That said, the vulnerability of various emerging economies should not be underestimated. Considerable downside risks remain.