Dutch bank cuts first-quarter economic growth forecast

The Dutch economy is expected to grow by 0.6% this year and 0.9% next year. Rabobank expects this to happen after the first quarter of 2023 recorded a startling economic contraction due to weak global trade. Economists at ABN Amro are also less optimistic, predicting growth of 0.7% this year and 1% in 2024.

Economists at Rabobank forecast that household and government spending will keep demand for goods and services stable, but the labor shortage will limit economic growth. This will lead to higher inflation, but less than last year. Rabobank also expects the unemployment rate to rise slightly, but remain low, as labor shortages continue.

Rabo Research chief economist Estelle Barendret said the economic slowdown began sooner than expected. “Falling exports and declining inventories, in particular, contributed to the contraction in the first quarter. But from a historical perspective, it’s still small,” Barendret said. “Although high inflation has squeezed the purchasing power of households, wages are now rising sharply, a record number of Dutch people are working for pay, and the government is also supporting their income. demand remains stable.”

ABN Amro does not believe the Dutch economy will end up in a deep recession as it is so resilient. “For example, a persistently tight labor market is supporting spending. In addition, there are substantial buffers for businesses and households, as a result of which the negative impact on the housing market remains limited. A slowdown in growth is “welcome”, he said, as there are signs the economy is overheating.

The Organization for Economic Co-operation and Development (OECD) reported Wednesday that it forecasts 0.9% economic growth in the Netherlands this year. A think tank in Paris forecasts growth of 1.4% next year.

The Central Planning Office (CPB) warned late last month of a slowdown in the Dutch economy. recession still possible. The CPB’s latest economic forecast is for March. At the time, the institute assumed growth rates of 1.6% and 1.4% for this year and next, respectively.