Economic Research Department: Acceleration in economic growth to continue in 2016
The Dutch economy will grow by 1.75% in 2015 and 2016. Exports, private investment and private consumption are all rising. Growth could be even higher if the uncertainties relating to Greece and the armed conflict in eastern Ukraine remain more in the background than expected.
This is the message from the Rabobank Economic Research Department economists in the Quarterly Economic Report published today.
Growth is urgently needed
Higher growth is urgently needed because of the damage caused by the crisis in recent years, from which the Netherlands has not yet fully recovered. 'Growth will accelerate in 2015 and 2016 and become less dependent on exports,' says Rabobank economist Martijn Badir. 'This is a good thing, although if we compare the situation to that of 2008, there is no reason to be completely satisfied. We expect income per capita for the Netherlands to be still below the pre-crisis level by the end of 2016.'
'The recovery in the labour market is a positive development,' says Badir. 'We are also seeing people who had withdrawn from the labour market – and who thus no longer featured in the unemployment figures – returning. We still expect to see a disappointingly high unemployment rate of 6.5% in 2016.'
Weaker euro supports the eurozone economy
According to the Economic Research Department economists, there are many positive factors facilitating a global economic recovery, which could be faster than expected. These factors include lower oil prices, lower inflation and thus higher purchasing power for consumers. For the eurozone, there is an additional boost to growth from the weaker euro.
Effects of ECB action
The recent weakening of the euro is a direct result of the monetary easing programme by the ECB that started this week. 'The weak currency stimulates international demand for products from the eurozone and reduces demand for imports. With the weaker euro however, the ECB is putting pressure on other monetary policymakers, as we are seeing in Switzerland and Denmark. Larger countries are also struggling to deal with the side-effects of the new European monetary experiment: the weaker euro is not helpful for the US and China. The Chinese yuan is effectively pegged to the dollar and therefore is also appreciating against the euro along with the dollar. The timing of this is awkward. The ECB’s policy could thus provoke policy reactions that could undo the euro’s relative weakness.'
Read the Quarterly Economic Report.