Netherlands: Country Economic Forecast 201219 January 2010
by marketresearch -- last modified 05 July 2012
This report contains detailed economic forecasts and analysis for Netherlands, including an assessment of the government's austerity programme.
The Netherlands is officially back in recession, with GDP having fallen by 0.7% in 2011Q4 after declining 0.4% in Q3. Though recent survey data have been firmer, GDP is likely to continue to fall in 2012Q1 and the economy to remain in recession throughout 2012H1. The openness of the economy has left it heavily exposed to the worsening Eurozone sovereign debt crisis, while domestic demand has continued to struggle and been unable to offset the external weakness. Providing there is no escalation of the crisis, we expect recovery to follow in 2012H2. By then households should be seeing their incomes growing in real terms once more, with inflation set to slow sharply, while a more stable external environment should underpin an improvement in export prospects and a gradual strengthening in business confidence, encouraging firms to spend their cash surpluses. Under these circumstances, GDP is forecast to decline by 0.8% in 2012, before recovering to grow 1.5% in 2013. The government has remained firm in its commitment to its austerity programme and has hinted there could be further austerity measures should weak growth prevent it from achieving its targets. However, the report questions whether this would be the right approach and, with the public finances in considerably stronger shape than in many other Eurozone countries, the authors would argue in favour of a temporary loosening of fiscal policy to help to stimulate the economy were the recession to deepen.
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