Rabobank: Acceleration in economic growth to continue in 2016
The Dutch economy will grow by 1 3/4% in 2015 and 2016. If geopolitical tensions do not escalate further and confidence recovers, growth could be even higher. This is needed because of the damage caused by the crisis in recent years, from which the Netherlands has not yet fully recovered. The economic recovery is now broad-based: exports, private investment and private consumption are all rising. This is the message from the Rabobank economists in their Quarterly Economic Report published today.
“Growth will accelerate in 2015 and 2016 and become less dependent on exports. This is a good thing, although if we compare the situation to that of 2008, there is no reason to be completely satisfied,” says Rabobank economist Martijn Badir. “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. We are also seeing people who had withdrawn from the labour market – and who thus no longer featured in the unemployment figures – returning. Still we expect to see a disappointingly high unemployment rate of 6 1/2% for 2016. Higher economic growth is therefore urgently needed.”
Weaker euro supports the eurozone economy
According to the Rabobank economists, there are many positive factors which make a faster-than-expected global economic recovery possible, such as lower oil prices, lower inflation and thus higher purchasing power for consumers and – for the eurozone – the additional boost to growth from the weaker euro. Badir: “The major economic blocks all posted good growth figures at the end of 2014, which forms an excellent basis for an acceleration of economic growth in 2015. If the uncertainties relating to Greece and the armed conflict in eastern Ukraine remain more in the background than we currently expect, the incipient recovery can gain momentum and the Dutch economy would benefit from this through exports.”
The additional positive boost to economic growth in the eurozone from the recent weakening of the euro is a direct result of the quantitative easing programme announced by the ECB. “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.”
The Quarterly Economic Report is available at: www.rabobank.com/economie.