Economic Recovery Fails to Get off the Ground
AMSTERDAM, 19/07/13 - The Dutch economy will show scarcely any growth again next year, ING’s economic desk forecast Thursday.
For 2014, ING is projecting Gross Domestic Product (GDP) growth of 0.1 percent. This means the bank’s economists are much more pessimistic than bodies including the Central Planning Bureau (CPB) and the International Monetary Fund (IMF). These are provisionally forecasting growth of 1 percent.
The Netherlands can benefit next year from the rise in world trade, but the expected increase in exports will be overshadowed by the further decline in domestic spending, ING predicts. Partly due to the persistent cutbacks, consumption will decline for the fourth successive year in 2014.
ING says the Netherlands is slipping further and further back compared with other core eurozone countries like Belgium, Germany, France and Austria. There the economy has grown since the recession of 2009 by 4 to 8 percent, but in the Netherlands, only by 1 percent. The bank blames this mainly on the problems on the housing market.
While house prices in the Netherlands fell, houses in the other core countries appreciated in value. The lower house prices and growing left-over debt (surpluses over mortgages, or negative equity) are putting a brake on spending in the country.
ING stresses that the economy is not in a bad position structurally. The recovery will however be restricted by the many cutbacks, which brake growth in the short term. In this connection, ING considers it the wrong moment to cut too deeply in government spending.