Rabobank in business

13-3-2008 | Press Release

The growth of the Dutch economy is not expected to level off to the European average until 2009. Despite the worldwide slowdown, economic growth in the Netherlands is forecast to be 2.75% in 2008, which remains above both the long-term average and growth levels in the rest of Europe. The fact that economic activity in the Netherlands is levelling off somewhat following the boom year 2007 is actually a blessing in disguise. These and other findings are presented in the Rabobank Economic Quarterly Report published today.

With an ultimate growth figure of 3.5%, 2007 represented the pinnacle of a period of strong economic growth in the Netherlands. The Dutch economy particularly outperformed the rest of Europe in the second half of the year. This performance was also achieved against the background of a global slowdown in growth. There is consequently no cause for panic now that this growth is beginning to level off somewhat. On the contrary, the Rabo economists state that: Considering the shortages in the labour market and the related rising wage costs and inflation, the Netherlands could actually benefit from a slight cool-down. 

There are, however, dark clouds looming worldwide. An isolated problem in the U.S. market for home mortgages has ballooned into a global financial crisis. The U.S. economy is teetering on the edge of recession due to falling house prices, a faltering financial system and sharply decreased consumer confidence. This will translate into lower growth in the rest of the world via international trade. 

This will also cause the growth of European economies to slow down somewhat, although the conditions will vary considerably from country to country. The Southern European countries are generally expected to perform the worst. The Rabo economists are currently not of the opinion that Europe will go into a recession. 

Inflation
Inflation is under upward pressure in both the U.S. and the EU, primarily due to high raw material prices. The Netherlands will also not escape the global growth slowdown, although, as mentioned above, the country will still continue to achieve above-average performance. 

The Rabo economists do, however, believe it is crucial that the Dutch government creates substantial budget surpluses. ‘Doing nothing’ in combination with rising staff and health care costs could cause the Indian summer that the Dutch economy is presently enjoying to turn suddenly into a turbulent autumn storm. 

The March edition of the Economic Quarterly Report furthermore features a broad international scope. Not only the Eurozone and the United States are examined in greater detail than in the past, the Rabo economists now also closely examine the situation in Japan, China, Italy and Spain.