THE HAGUE, 20/12/00 - The Central Planning Bureau (CPB) now expects Gross Domestic Product growth to turn out lower next year than forecast earlier. On Prince's Day (Budget Day, last September), the CPB was still projecting GDP growth of 4 percent in 2001, but it now sees growth next year turning out at only 3.5 percent.

This year as well, growth will be slower than the CPB predicted earlier. In September, the bureau was still expecting GDP to expand by 4.5 percent in 2000, but it now puts the figure at 4.25 percent.

The planning bureau revised its estimates downward because growth of the world economy is expected to turn out a fair bit lower than expected. This is related to the high price of oil and the weak euro, causing an increase in inflation in the EU and negatively affecting exports. As well, less is being invested and consumer spending is increasing less rapidly than expected last summer.

Inflation is seen surging to 4.25 percent in 2001, mainly as a result of the new tax system to be introduced next year. The higher inflation rate is also expected to put upward pressure on wages, with the tight labour market also affecting wage trends.

Wages, too, may rise next year by more than forecast earlier by the CPB. Based on the most recent collective pay (CA0) accords, the CPB is now forecasting that contractual wages will go up by 4 percent next year, compared with the 3.5 percent increase predicted earlier.