The Dutch consumer-led economic recovery is speeding up as low borrowing costs and a weaker euro deliver an added boost, the Dutch central bank said.
The country’s economic expansion is forecast to accelerate to 2 percent in 2015 from 0.9 percent in 2014, the central bank said in its semi-annual economic outlook on Monday. The Amsterdam-based institution, led by Governor Klaas Knot, forecast growth of 1.8 percent in 2016 and 2.2 percent in 2017.
“The economy is gaining momentum and has overcome the crisis,” Job Swank, a director at the central bank, told reporters. “The depreciation of the euro, lower long-term interest rates -- which have an impact on wealth -- and an increase in international trade, mainly within the euro zone” have contributed to the improved outlook, he said.
The favorable economic conditions can partly be attributed to the European Central Bank’s asset-buying program for the euro area, the Dutch central bank said. The inflation-boosting plan to buy 60 billion euros ($67 billion) a month of bonds, announced on Jan. 22 and started in March, contributed to a drop in the single currency and an initial slide in bond yields.
The impact of quantitative easing on growth in Dutch gross domestic product is estimated at an average 0.2 percentage point annually, Swank said. The QE program could also lead to a further depreciation of the euro, he said.
Low interest rates will boost credit demand and so lift consumption, company investments and home purchases, the central bank said. Housing mortgage debt is forecast to increase an annual 3.2 percent from 2015 until 2017, and stabilize at 97 percent of gross domestic product. The Dutch housing market is still recovering from its collapse after the financial crisis.
Inflation in the Netherlands is predicted to accelerate from an average of 0.2 percent in 2015 to 1.2 percent in 2016 and 1.4 percent in 2017. Unemployment is seen dropping from 7 percent in 2015 to 6.7 percent in 2017.