The Dutch economy will not shrink this year, but its growth will slow down, ABN Amro expects. The bank predicts that the economy will grow 1.2 percent this year and 1.3 percent next year. Over the past two years, the Dutch economy grew more than 4 percent per year.
The last months of last year turned out better than expected, and that will drive economic growth for this year, the bank’s economists predict. For example, the energy crisis turned out not too bad: energy prices fell quickly, and gas stocks were filled. The Netherlands also used much less gas than expected. And the economy grew through investments and exports. But above all, households remained optimistic, and consumption grew despite inflation.
The fact that growth will remain low this year is partly due to persistent inflation. Although it is falling, partly due to the price cap on energy, inflation is also spreading from energy to other products. The bank expects that consumer prices will rise by 4.4 percent this year and 4 percent next year.
The higher interest rates, with which the central banks are trying to curb inflation, also slow the Dutch economy. It costs more to borrow money, which has repercussions for the housing market and investments, ABN Amro said. Recessions in the United States, the United Kingdom, and the eurozone will also likely reduce demand for Dutch products.
The bank still expects wages to continue to rise next year. The labor market remains tight, and wages have already risen sharply in recently concluded collective labor agreements. Low unemployment also props up the economy. In addition, more people are changing jobs. That leads to “a more efficient distribution of scarce labor, which can provide some relief in times of scarcity,” the bank said.
Reporting by ANP