2023-09-11 09:52:54
The European Commission has significantly adjusted the expected economic growth of the Netherlands downwards for this year. Due to the high inflation in the first half of the year, households have less to spend than previously thought. At the same time, exports declined.
In the spring forecast, the Commission still assumed 1.8 percent in 2023. But following six months of high inflation and lower exports, the administration adjusted the summer forecast to growth of 0.5 percent for the Netherlands.
Yet it is not all doom and gloom. The Commission sees that unemployment is still low and wages are rising significantly. This prevents consumers from spending even less in the second half of the year.
Inflation will also gradually decrease, the board expects. This year inflation will reach 4.7 percent and 3.0 percent in 2024. This means that prices are 4.7 and 3 percent higher respectively than a year earlier.
Dutch growth will pick up once more next year because purchasing power will partly recover and exports to the most important trading partners will increase once more. The economy also benefits from government investments in defense and the transition to a sustainable economy, the EU executive estimates.
German contraction drags down European economy
The Netherlands is not the only country where growth expectations for this year are being reduced. According to the Commission, the entire eurozone will grow not 1.1, but 0.8 percent. This is mainly due to heavyweight Germany, where the economy is expected to shrink by even 0.4 percent this year.
European economic growth is suffering from high inflation and the interest rate increases by the European Central Bank that are intended to combat inflation, the committee notes. High prices “take a greater toll than expected”, but companies also find it more difficult to obtain credit due to high interest rates.
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