Dutch Economy to Grow 1.1 Percent in 2014, IMF Forecasts

The Netherlands, the fifth-largest economy in the euro area, will probably grow by 1.1 percent in 2014 following a 0.5 percent contraction this year, the International Monetary Fund said.

Unemployment this year will rise to 6.3 percent and is set to further increase to 6.5 percent next year, the Washington- based institution said in its latest forecast. The IMF in March predicted 2014 growth of “1 percent or even a shade higher.”

The Dutch government said yesterday that the country needs 1 percentage point of additional economic growth over the 2013-2014 period to meet the European Union deficit limit of 3 percent next year, according to a letter to parliament.

Prime Minister Mark Rutte postponed additional austerity measures totaling 4.3 billion euros ($5.6 billion) for next year and urged people to start spending in an effort to boost economic growth. The country as been in breach of the EU threshold of 3 percent of gross domestic product since 2009.

The Netherlands, in its third recession since 2009, had the outlook on its AAA credit rating cut to negative in February by Fitch Ratings, which cited problems in the banking system and difficult economic conditions. The Dutch housing market is going through a slump as prices slid more than 10 percent last year and have dropped 19 percent since 2008, according to the national statistics agency.

To contact the reporter on this story: Fred Pals in Amsterdam at fpals@bloomberg.net

To contact the editor responsible for this story: Stephen Foxwell at sfoxwell@bloomberg.net

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