Economy

Netherlands - Economic forecast summary (Netherlands 2014)

 

The recovery has been uneven as business investment has been volatile, but private consumption has started to recover. Growth should pick up somewhat as domestic demand gradually improves, but poor access to credit for small and medium-sized enterprises and low liquidity of household balance sheets are important headwinds. As a result of the tepid recovery, inflation is expected to remain low. The current account surplus exceeds 10% of GDP, reflecting strong exports and in part weak domestic demand.

Large fiscal consolidation has led to a major structural adjustment over the recent years.With the budget deficit reduced to below 3% of GDP, little further consolidation is assumed, which should lessen the drag on growth. Recent structural reforms to reduce labour market segmentation, increase work incentives and cut mortgage interest deductibility could help improve resource allocation and raise medium-term growth. These measures should be complemented with further efforts to boost financial buffers in banks and to reform the rental sector.

Note: All data definitions based on internationally comparable standards and may differ in specific cases from common national definitions.

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