“There is no need to think that the Dutch economy will structurally lag the euro zone any longer,” Knot, 46, who is also a member of the European Central Bank’s Governing Council, said in an interview yesterday at the World Economic Forum in Davos, Switzerland. “We will have to wait for mid-February to see whether the fourth-quarter gross domestic product numbers confirm the gradual recovery.”
The Dutch economy, the fifth-largest in the euro area, emerged from a year of recession in the third quarter as exports benefited from a nascent recovery in the currency region. The country has gone through three recessions since the origins of the global financial crisis in 2007.
Knot predicted in October that the previous quarter’s data would show the return to growth, helped in part by export demand. Consumer confidence improved and housing prices on a monthly basis have started to rise again, according to the Central Bureau of Statistics, or CBS.
Prime Minister Mark Rutte’s coalition government tried to revive a sluggish housing market while reining in home-loan debt levels that are among Europe’s highest. The market’s decline, triggered by the credit crisis and a deteriorating economy, was aggravated by government measures restricting mortgage-interest tax breaks and loan-to-value caps. House prices have dropped by about 20 percent since peaking in 2008, the central bank has said.
Knot, who took over from Nout Wellink in July 2011, said that curbing tax rebates has been the right thing to do.
“There has been something of a bubble, partly tax-driven,” he said. “Tax incentives played a huge role there, but the situation became unsustainable. This has changed now.”
The economy is also helped by increased investment, according to Knot.
“It seems that world trade is also picking up, so the export sector will profit from that,” Knot said. “If you look at the purchasing managers’ index readings, the Netherlands has actually led the pack already for many months, so the soft indicators are very good.”
The Dutch budget deficit will hit 3.3 percent of gross domestic product in 2014, the Hague-based government’s planning agency, CPB, said last month. The Netherlands has been in breach of the bloc’s limit of 3 percent of GDP since the beginning of the crisis. The government and opposition parties reached an accord in October for a 6 billion-euro austerity package for 2014 on top of a four-year, 16 billion-euro cut approved in 2012.
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