The Dutch economy is set to grow by between 2.5% and 3% up to the end of 2009, the central bank (DNB) says in its latest quarterly statement.
Describing the growth as ‘robust’, DNB warns however, that ‘the labour market will tighten considerably, leading to price and wage rises that could impair the medium-term outlook’.
With inflation set to reach 2.9% by 2009 and wage rises averaging 4%, the current level of growth cannot be maintained for long without either an increase in productivity or the labour supply, DNB says.
The report also looks at the growth in interest in Islamic banking. It says that an increasing number of Dutch financial institutions are interested in offering banking according to Sharia principles, which do not allow interest to be paid on loans and shun investment in the drinks and weapons industry.
While the risk profiles and organisational structures in Islamic banking appear to deviate from traditional banking, the current supervisory framework does offer enough scope to accommodate Islamic banks, the DNB says.
Worldwide, the market for Islamic banking has gone up 15% a year since the beginning of the century, DNB says. Demand in the Netherlands will grow ‘because of the increase in the size of the Islamic population, its educational levels and wealth.’
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