Dutch economy to grow at modest pace

Posted on Mar 22, 2011 in Business, News | 0 comments

Dutch economy to grow at modest pace

According to the Central Economic Plan 2011, published by CPB Netherlands Bureau for Economic Policy Analysis today, the Dutch economy is projected to grow by 1¾% and 1½% in 2011 and 2012, respectively.

These modest growth figures are not sufficient to catch up on the loss in growth sustained during the past recession. The economic growth is largely due to exports. Household consumption and business investments are also contributing factors. The labour market continues to exhibit positive trends: unemployment is projected to further decline to an average of 4% in 2012. Due to the higher inflation of 2% in 2011 and 2012, and due to policy measures, average purchasing power will decline in both forecast years. The forecasted budget deficit is declining rapidly from 5.2% of the gross domestic product (GDP) in 2010 to 2.2% of the GDP next year.

Major uncertainties
The final estimate of this Central Economic Plan was completed at the beginning of March. This means that the most recent developments in, for example, Japan, have not been included in the figures. Even if this had been possible, it would probably have been difficult at this time to estimate the effects on the development of the Dutch economy. Tentative estimates were produced on the basis of alternative scenarios, however, to account for the effects of higher oil prices, a worldwide recovery of consumer and producer confidence and a more expensive euro.

The world economy is recovering from the crisis. However, economic performance varies sharply from one country to another. The GDP of emerging economies in Asia last year increased by 9.0%. Growth figures in the United States (2.8%) and the euro region (1.7%) lagged far behind. The emerging economies are projected to continue to do relatively well in the forecast years as well. The national debt as a percentage of GDP increased sharply in highly developed economies and governments are faced with the task of getting their government finances in order. This will reduce economic growth in the coming years. The growth of the relevant world trade, in which the highly developed economies carry a lot of weight, is consequently slowing down from over 11% in 2010 to 6¼% this year and 5% next year.

The Dutch economy
According to the provisional figures published by Statistics Netherlands, the economy grew by a 0.6% (quarter-on-quarter) in the fourth quarter of 2010. The growth rate is projected to decline somewhat in the next few quarters, resulting in an annual GDP growth of 1¾% this year and 1½% in 2012. The sharp decline in production during the Great Recession and the modest forecasted and actual growth since that time imply that the production peak experienced at the beginning of 2008 will only be equaled by the middle of next year. Roughly speaking, the Netherlands has therefore lost four years in economic growth due to the credit crisis.

More at The Dutch Daily News

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