Dutch Getting Slice of Euro-Area Recovery Even as Growth Slows

  • Forecasts were increased to record highs for this year
  • Jobless rate also seen improving towards 2011 levels

As the euro-area economy improves, the spotlight moves between German strength or whether under performers France and Italy will get their act together. The region’s fifth-largest economy knows where it wants to be.

After growth of 2.1 percent in 2016, economists are raising their outlook for the Dutch economy in the coming years, which will expand 2 percent this year, 1.7 percent next year and 1.4 percent in 2019, according to the survey conducted May 5-12. While that’s better than predictions in Bloomberg’s February survey, the forecasts are still slightly less optimistic than the European Commission’s.

Dutch gross domestic product expanded 0.4 percent in the first three months of 2017, the nation’s statistics bureau said on Tuesday. The number missed the median estimate of economists, who’d predicted expansion of 0.5 percent in line with that of the euro area in the first quarter.

The Netherlands is still trying to form a new government after Prime Minster Mark Rutte’s Liberal Party won elections earlier this year. An attempt to form a coalition with the Greens, the Christian Democrats and D66 failed Monday, 61 days after the March 15 ballot. A new government will require at least four parties to join to get a majority in the Tweede Kamer, the Dutch lower house.

To read more on Rutte’s Options after winning the Dutch election, click here

“Given the Dutch experience it could easily take many more weeks, or months, before a new government will take office,” said Dimitry Fleming, an economist at ING Groep NV. “From an economic point of view, there is no need to rush. After two years of above-average growth, the economy is not showing any signs of slowing its pace.”

Inflation in the Netherlands increased 1.6 percent in April after rising 1.1 percent in March and economists expect prices to rise by 1.5 percent this year and next year, according to the survey.

The unemployment rate has improved since January and fell to 5.1 percent in March from 5.3 percent in February. Economists expect joblessness to average at 5.1 percent this year and at 4.8 percent in 2018, according to the survey, up from their February forecast.

European Central Bank President Mario Draghi told Dutch lawmakers early last week that incoming euro-area data are becoming “increasingly solid” and downside risks have diminished, while loose policy continues to be needed amid muted underlying inflation and wage growth.

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