The Dutch economy will grow by an average 2% a year up to 2015, which is somewhat lower than the increase in recent years, according to a report on the future of the Dutch economy published by Rabobank on Friday.
The slowdown is largely the result of the aging population which means the labour market will not grow at the same rate as recent years, says the report.
Because of the uncertainties of global economic factors in the future, the bank also calculated a number of hypothetical scenarios which could influence the country’s economic growth.
The price of oil, for example, will have a considerable effect on the Dutch economy. If it rises to $220 per barrel, economic growth in the Netherlands will slow to 1.4% and inflation will go up to around 3.1%, says Rabobank.
Meanwhile, if the US dollar falls to $2 against the euro this would have a ‘relatively modest’ effect on the Dutch economy. Economic growth would then be 0.3 percentage points lower because a strong euro reduces competitive position, according to the report.
A major Asian economic crisis would also have a limited effect on the national economy, reducing growth to 1.8% annually compared to the basic scenario of 2%, the bank says.
‘What is clear is that the Dutch economy is strongly dependent on international developments. On one hand this makes us vulnerable to fluctuations in international trade, on the other hand it also offers opportunities,’ the report says.
Although the labour market is an important factor in economic growth, in the mid-term, an extra 400,000 workers would only result in a 0.1 percentage point rise on the basic 2% economic growth figure, the bank says.
However there are advantages in the longer term, says the report. A bigger labour market supply would keep salaries stable, strengthen the competitiveness of Dutch businesses and reduce inflation. All of these factors would eventually increase economic growth.
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