Rabobank Group

1-12-2009 | Press Releases

Rabobank expects unemployment to rise to 7¼% in the Netherlands in 2010, but does not envisage a 1980s-type disaster scenario. The current labour market is in a structurally better position. This is revealed in Outlook 2010 published today. Rabobank forecasts slight economic growth of 1% in the Netherlands next year. ‘The good news is that, even though the Dutch economy has contracted by more than 4%, the Netherlands remains a prosperous country. Average per capita income in the Netherlands remains at the 2006 level when the country was wealthier than ever before. This is, however, no consolation for the many Dutch people who have already lost or will lose their jobs in 2010,’ says Executive Board Chairman Piet Moerland.

Rabobank economists compared the current labour market in the Netherlands with the situation in the 1980s. While the number of people entering the Dutch labour market increased significantly in the early 1980s, the number of people participating in the labour market is set to decrease continually in the coming years as the baby boomers retire. In addition, the Dutch labour market is considerably more flexible today than it was thirty years ago. Greater flexibility and lower labour supply will lead to a more rapid decline in unemployment in the somewhat longer term. Shortages on the Dutch labour market could consequently return relatively swiftly primarily due to demographic developments. While this development is not forecast for 2010 or 2011, it is expected to occur in the following years. It will then remain to be seen whether the functioning of the Dutch labour market has improved sufficiently over the past thirty years to also be able to handle sustained shortages.

Between hope and fear
Outlook 2010 is a narrative poised between hope and fear. The crisis that has severely impacted the Netherlands’ real economy since the second half of 2008 also appears to have damaged the Dutch economy’s potential for growth in the years ahead. The Dutch economy’s rate of growth will end up at a lower level. It will consequently take a prolonged period for the Netherlands to be able to recoup the wealth lost in the financial and economic crisis.

Rabobank economists believe that the signs of a recovery of world trade provide hope for the Netherlands’ open economy. They do, however, make the qualification that there is still not a strong and sustainable engine for growth worldwide. The financial sector is in the midst of restructuring. US consumers are burdened by high debt levels and a sharply deteriorated labour market. European consumers are extremely concerned about the future. Executive Board Chairman Moerland comments: ‘Many people understand all too well that the range of economic rescue measures will ultimately have to be paid for through higher taxation. While Asian consumers may be able to provide an impetus for the recovery of world trade, it will only be limited in scale. This is because consumers in emerging Asian economies are often compelled to save large amounts due to the lack of a social safety net and only moderately developed financial markets.’

While Rabobank foresees a slight improvement in Dutch producer and consumer confidence in 2010, it does not expect this recovery to be intrinsically robust. The Netherlands will once again experience shrinking volumes of consumer spending and business investment in 2010. Rabobank does, however, envision a cautious recovery in investments through the course of the year. Another source of guarded optimism is that the Dutch housing market is set to return to calmer waters and is expected to show the first signs of a sustained recovery in 2010.

Globalisation at a crossroads
The theme study Globalisation at a crossroads is being published to coincide with Outlook 2010. Rabobank economists examine changing patterns in world trade in this theme study. Emerging economies now account for half of world trade and are already as important as the industrialised world in terms of international trade. The economists note that the emerging world has reported a trade surplus in the past decade, while the industrialised world has posted a trade deficit during the same period. This means that the emerging world is in effect financing the industrial countries’ trade deficit. In view of the fact that political and economic balances of power are inextricably interlinked, the economists wonder what effect this will have on the global political stage. ‘We view a joint approach to these imbalances in both the countries with deficits and those with surpluses as the only sustainable solution. It is crucially important that Europe speaks with a single, strong voice on the major economic and trade issues. We will otherwise gradually become marginalised,’ says Moerland.