Rabobank: Slowdown in global economy, upturn in Dutch economy

While global economic growth is slowing down this year, economic growth in the Netherlands is speeding up. Dutch GDP is expected to grow by 2¼% this year, and the growth rate will rise to 2¾% in 2016. Dutch exports and domestic demand are ensuring a broad base for this growth. This is the message from the Rabobank economists in their Quarterly Economic Report published today.

The global economy is suffering in particular from disappointing growth in emerging markets...

The slowdown in the growth of the global economy is largely due to decelerating growth in emerging markets, including China. Global growth is disappointing again this year, down to 3¼% from a growth rate of 3.4% in 2014. The growth of the global economy will remain moderate in 2016, at 3½%. The principal causes are the slowdown in Chinese growth and low commodity prices. Herwin Loman, international economist at Rabobank: “The low commodity prices are actually bolstering growth in developed countries, which is helping to offset the effect of disappointing exports to emerging markets. But while the upturn in growth in the eurozone and other developed countries is good news for the global economy, it is not enough to prevent a slight slowdown in worldwide economic growth.”

…while Dutch economic growth has a broad base

Dutch economic growth will have a broader base this year and next year compared with 2014. Rising private investment and private consumption are now making a considerable contribution alongside higher exports. Theo Smid, national economist at Rabobank: “Private consumption will grow faster next year due to a further increase in disposable household income. This is the result of improving employment and the Cabinet’s plans to reduce taxation by EUR 5 billion. Exports will also grow faster this year and next year. The euro is relatively weak and is expected to fall slightly further in the course of this year. That is good news for businesses that export to countries outside the eurozone. Our export sector will also benefit during the rest of this year and in 2016 from the further upturn in growth in the eurozone.”

Smid emphasises that not everyone will necessarily notice the improvements in the economy yet. “It is true that we are seeing a recovery in the housing market and consumption, which were the main negative factors in the past few years. But unemployment is still far above the level before the recession. It may be falling fairly steadily but there is still a long way to go before all the damage has been repaired. There are also risks that could throw a spanner in the works. The downturn in growth in China is hitting commodity producers particularly hard. Lower growth in emerging markets is slowing down global economic growth, which could also affect our exports. Furthermore, the situation in Greece has probably only temporarily fallen off the radar. Renewed uncertainty could undermine confidence among households and businesses.”

The Quarterly Economic Report is available to read and download at www.rabobank.com/economics.

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