Dutch Economy Gets Positive Central Bank Review Before Elections

  • Recovery mainly supported by local spending, central bank says
  • Government will probably report budget surplus for 2018

Four years ago, when Prime Minister Mark Rutte started his second term, the Dutch economy was suffering from a housing market slump caused by the worst financial crisis since World War II. With just six weeks before elections, the economic future looks bright for the Netherlands, according to the nation’s central bank.

When Rutte took office he and his Finance Minister Jeroen Dijsselbloem announced an extensive package to catalyze the economy. The government reformed the housing and labor market, increased the pension age and implemented 22 billion euros ($23.5 billion) in austerity measures.

“Since 2015 the economic recovery has mainly been supported by local spending,” the central bank said on Monday as it published new forecasts. From 2018, domestic spending will cool due to faster inflation and a slowdown in house-price growth, it said.

The labor market continues to surprise, the central bank said.

It sees employment rising 1.3 percent this year and 1 percent in 2018, outpacing the number of people entering the labor market. Joblessness among older people and the long-term unemployed started to fall in 2016 -- a clear sign that the labor market is improving, according to the central bank.

Continued economic growth means an improving fiscal position. The government’s take from corporate and income taxes is rising, and it’s been able to collect taxes earlier due to system improvements.

Still, given the open nature of the economy, risks will remain, the central bank said. “Policy uncertainty is high, in the European Union as well as in the U.S.”

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