March 5, 2019

Preliminary Forecast March 2019 (cCEP 2019)

The economy is cooling

Press release
The high growth rate of the Dutch economy is over. For both this year and the next, GDP growth is projected at 1.5%, following years of growth percentages of over 2%. International trade is increasing at a slower rate, which is reflected by Dutch exports that are projected to grow substantially less rapidly in 2019 and 2020, compared to previous years. International uncertainties, such as US trade policy, Brexit and the state of the Chinese economy, have a negative impact on the economy. The budget also is projected to contribute by less than initially planned. Despite the lower growth levels, unemployment will stay low, purchasing power will increase and government finance remains under control. These are the conclusions published today by CPB Netherlands Bureau for Economic Policy Analysis, as included in its projections in the Central Economic Plan 2019 (CEP).
Main image

Main data for the Dutch economy 2018 2019 2020
GDP growth back to normal 2.5 1.5 1.5
Unemployment remains low 3.8 3.8 4.0
Higher inflation in 2019, due to higher VAT and energy taxes 1.6 2.3 1.4
Policy and higher wages are stimulating purchasing power 0.3 1.6 1.3
Budget surplus 1.4 1.2 0.8
Government debt continues to decrease 52.4 49.1 47.1

Government spending will increase substantially, although less so than envisaged. Higher expenditures will contribute to the economic growth projected for 2019 and 2020. And yet, some planned increases in spending, particularly regarding defence and infrastructure, will not be realised, partly because of the tight labour market. This contributes to a larger budget surplus projected for both years.  

In addition to the newest economic figures, CPB also points to the benefits of   a stable budget policy in case of further economic decline. Lower educated people and those working in flexible employment relationships would be hit the hardest by such a decline. Structural reforms could limit the uncertainties for such vulnerable groups in society.  

The full report, the Central Economic Plan 2019, is to  be published (in Dutch) on 21 March. It will include the same figures as those presented today. 

Economic growth back to normal

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Fan Charts March 2019 (cCEP)

The figures present fan charts around the CEP 2019 point forecasts for GDP growth, HICP inflation, unemployment and general government financial balance.

The figures present fan charts around the CEP 2019 point forecasts for GDP growth, HICP inflation, unemployment and general government financial balance.The solid line represents data realizations (2014-2018) and the CEP 2019 point forecasts for 2019 and 2020. Around the central path the figures present a fan of confidence intervals:

  • 30% confidence interval from the 35th to 65th percentile, dark blue area
  • 60% confidence interval from the 20th to 80th percentile, dark blue + blue area
  • 90% confidence interval from the 5th to 95th percentile, dark blue + blue + light blue area

The probability is thus 30% that the outcome will fall in the dark blue area and the probability is 10% that the outcome will fall outside the fan. In other words, the fan is a graphical representation of the likelihood of the various outcomes. The solid line represents the most likely outcome and outcomes are more likely when they are closer to the solid line.

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March 5, 2019

Forecast 5 March 2019 (cCEP 2019), figures

The high growth rate of the Dutch economy is over. For both this year and the next, GDP growth is projected at 1.5%, following years of growth percentages of over 2%. International trade is increasing at a slower rate, which is reflected by Dutch exports that are projected to grow substantially less rapidly in 2019 and 2020, compared to previous years. International uncertainties, such as US trade policy, Brexit and the state of the Chinese economy, have a negative impact on the economy. The budget also is projected to contribute by less than initially planned. Despite the lower growth levels, unemployment will stay low, purchasing power will increase and government finance remains under control.

Economic growth in the Netherlands

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Table 'Main economic indicators', 2017-2020, 5 March 2019

International items
  2017 2018 2019 2020
Relevant world trade volume goods and services (%) 5.0 2.8 1.8 2.5
Export price competitors (goods and services, non-commodities, %) 2.1 0.9 1.2 1.2
Crude oil price (dollar per barrel) 54.3 70.9 61.0 61.0
Exchange rate (dollar per euro) 1.13 1.18 1.14 1.14
Long-term interest rate the Netherlands (level in %) 0.5 0.6 0.4 0.6
GDP and demand (volume)
  2017 2018 2019 2020
Gross domestic product (GDP, economic growth, %) 2.9 2.5 1.5 1.5
Consumption households (%) 1.9 2.5 1.3 1.5
Consumption general government (%) 1.1 1.1 2.4 2.3
Capital formation including changes in stock (%) 4.4 4.2 2.6 2.5
Exports of goods and services (%) 5.3 2.7 1.1 2.3
Imports of goods and services (%) 4.9 2.7 1.5 3.0

Prices, wages and purchasing power
  2017 2018 2019 2020
Price gross domestic product (%) 1.2 2.1 2.2 1.4
Export price goods and services (non-energy, %) 1.9 0.8 1.1 1.1
Import price goods (%) 4.2 2.5 -0.4 1.0
Inflation, harmonised index of consumer prices (hicp, %) 1.3 1.6 2.3 1.4
Compensation per hour private sector (%) 1.2 2.3 3.4 2.6
Contractual wages private sector (%) 1.6 2.0 2.7 2.3
Purchasing power, static, median, all households (%) 0.3 0.3 1.6 1.3
Labour market
  2017 2018 2019 2020
Labour force (%) 0.8 1.2 1.3 0.7
Active labour force (%) 2.1 2.3 1.4 0.5
Unemployment (in thousands of persons) 438 350 345 370
Unemployed rate (% of the labour force) 4.9 3.8 3.8 4.0
Employment (hours, %) 1.9 2.3 1.0 0.5
Other items
  2017 2018 2019 2020
Labour share in enterprise income (level in %) 73.4 74.0 75.1 75.6
Labour productivity private sector (per hour, %) 0.9 0.3 0.6 1.2
Private savings (% of disposable household income) 2.9 2.3 2.6 2.9
Current-account balance (level in % GDP) 10.5 10.1 9.7 9.0
Public sector
  2017 2018 2019 2020
General government financial balance (% GDP) 1.2 1.4 1.2 0.8
Gross debt general government (% GDP) 57.0 52.4 49.1 47.1
Taxes and social security contributions (% GDP) 38.7 39.1 39.6 39.3
Gross government expenditure (% GDP) 43.0 42.4 42.5 43.0

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