Wednesday 22 March 2023

The Netherlands’ economic outlook has darkened: OECD


The outlook for the Dutch economy has ‘darkened’ with economic growth set to slow to 0.8% next year and 1.1% in 2024, according to the OECD’s latest report on the Netherlands.

Inflation will remain high, moderating to 3.9% by the end of 2-25, after peaking at 15.4% in the fourth quarter of this year, the OECD says.

At the same time, household spending will gradually strengthen, aided by government support measures and changes to benefits and unemployment will remain low at 4.3% in 2024 as the labour market remains tight.

The OECD says that monitoring support measures and ensuring energy security is key but that the government should monitor the energy price cap carefully and revise it as needed, to ensure that it is targeted at households in need and that incentives to save energy are in place.

At the same time, an acceleration of the green transition, to ensure energy security and reduce fossil fuel dependence should be a priority.

The European Commission is less optimistic for 2023, putting Dutch economic growth at 0.6% but more optimistic about the recovery in 2024, with a growth forecast of 1.3%.

The commission too sees headline annual inflation decreasing to 3.9% in 2024, and says the planned expiry of the price cap on energy will prevent a sharper decline.

Across the EU, the commission says growth will subdue to 0.3% (both EU and euro zone) next year, will inflation will remain high, at 6.1% in the eurozone in 2023.

The commission has also called on the Netherlands, as one of several ‘high debt’ EU countries, ‘to take the necessary measures’ to ensure that its 2023 budget is fully in line’ with official European recommendations.

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