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Post-crisis recovery continues, uncertainty remains

Published: 20 September 2016

The recovery of the Dutch economy is continuing, but remains uncertain; among other things, due to the Brexit, low interest rates and a flexible monetary policy in both the European Union and the United States. In the Netherlands, growth is projected at 1.7%, for both 2016 and 2017. This year, unemployment will drop to 6.2% and will remain stable in 2017. The government deficit will decrease to 1.1% of GDP in 2016 and 0.7% in 2017.

Steady, post-crisis recovery is projected to continue over the 2018–2021 period, both internationally and in the Netherlands. The global economy will grow by an average of 4%, annually, and for the Netherlands this will be 1.7%. Unemployment will decrease slightly, to 5.5% by 2021. The government budget is projected to go from a deficit of 0.7% GDP in 2017 to a surplus of 0.9% of GDP in 2021. The budget will prove sustainable in the long term, as is concluded in the Macro Economic Outlook (MEV), published today by CPB Netherlands Bureau for Economic Policy Analysis.

Purchasing power
Median purchasing power is projected to improve by 1.0%, next year. Those employed will experience a 1.1% improvement, as will benefit recipients, while for pensioners this will be 0.7%. These figures also include the Cabinet’s policy measures for 2017.  

Median static purchasing power is not expected to increase over the 2018–2021 period. For the employed, it will remain stable, while benefit recipients and pensioners will see a decrease.   

In line with economic recovery and supported by increasing oil prices, inflation in the eurozone will increase. For the Netherlands, medium-term inflation is projected to remain low, with an average 1.2%, similar to that in the rest of the eurozone, and far below the ECB’s objective.  

Labour market flexibility – analysis
CPB’s analysis in this year’s MEV report concerns labour market flexibility. In the Netherlands, the number of people with a flexible labour contract and independent professionals are increasing; both are now on a higher level than in other countries. Whether this is a negative thing is debatable. Preferences of the employed offer no plausible explanation for this increase in flexibility in the Netherlands, nor do general trends – such as in globalisation and technological developments. After all, surrounding countries are also affected by such trends. Figures show that the high level of flexibility is also not a temporary phenomenon, or the result of an unfavourable economic situation. This appears to leave policy as the determining factor, which is also where the key to chance will be found.

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