August 19, 2022

Projections August 2022

Inflation is affecting more and more people, economic growth decreases

Press release
The Dutch economy has emerged strongly from the coronavirus crisis, but the momentum is now starting to swing the other way. Increasing numbers of households are feeling the negative financial impact of high inflation, which is expected to bring consumption growth to a grinding halt, in the coming quarters. This is shown by the projections in the concept version of the Macro Economic Outlook (cMEV) published by CPB Netherlands Bureau for Economic Policy Analysis. CPB Director Pieter Hasekamp: ‘Households are feeling the impact of high inflation and this will have repercussions for the economy. There is a growing number of people already struggling to make ends meet and for whom the energy bill is threatening to become unaffordable.’
Projections August 2022

These projections form the starting point for the Dutch Cabinet’s final decision-making process regarding next year's budget. On 'Prinsjesdag' (i.e. the day of the King's Speech which includes the main elements of the government budget for the coming year, this year on 20 September), CPB will publish the definitive version of the Macro Economic Outlook (MEV), which also incorporates these latest decisions.

Purchasing power greatly reduced, while poverty increases

Wage increases are lagging behind the high rate of inflation, which is reducing average purchasing power by 6.8% in 2022.  In addition, there is inflation-related inequality: the lower the income, the greater the financial burden of inflation. Standard purchasing power is based on average inflation and, therefore, does not take into account these kinds of differences between households.

This is the first year that CPB’s projections include poverty development. Poverty is increasing, as inflation means that people need more and more money to meet their basic needs, while income levels are rising only slightly. As a result, the percentage of people suffering from poverty will increase to 7.6% in 2023, and for children this is even 9.5%. As is the case with purchasing power, these figures are an underestimation of the actual problems.

  2020 2021 2022 2023
Economic growth slows down after strong recovery (gdp, growth %) -3.9 4.9 4.6 1.1
Labor market remains tight (unemployment, % labour force) 4.9 4.2 3.4 3.9
Energy prices cause high inflation (cpi, %) 1.3 2.7 9.9 4.3
Static purchasing power reduces greatly (%) 2.5 0.3 -6.8 0.6
Temporary factors improve government deficit (% gdp) -3.7 -2.6 -0.9 -1.1

Read more (extended explanation, main economic indicators, purchasing power).

Contacts

Table 'Main economic indicators', 2020-2023, August 2022

International items
  2020 2021 2022 2023
Relevant world trade volume goods and services (%) -9.1 8.4 4.9 2.9
Export price competitors (goods and services, non-commodities, %) 0.3 6.1 9.7 3.2
Crude oil price (dollar per barrel) 41.8 70.7 105.3 89.7
Exchange rate (dollar per euro) 1.14 1.18 1.06 1.02
Long-term interest rate the Netherlands (level in %) -0.4 -0.3 1.1 1.6
GDP and demand (volume)
  2020 2021 2022 2023
Gross domestic product (GDP, economic growth, %) -3.9 4.9 4.6 1.1
Household consumption (%) -6.4 3.6 5.7 -0.3
Government consumption (%) 1.6 5.2 1.6 3.2
Capital formation including changes in stock (%) -6.3 2.9 2.6 0.8
Exports of goods and services (%) -4.3 5.2 4.0 3.2
Imports of goods and services (%) -4.8 4.0 2.8 3.2

Prices, wages, purchasing power and poverty
  2020 2021 2022 2023
Price gross domestic product (%) 1.9 2.5 4.2 5.4
Export price goods and services (%) -2.9 8.3 16.6 2.9
Import price goods and services (%) -3.6 10.2 22.1 2.6
Inflation, national consumer price index (CPI, %) 1.3 2.7 9.9 4.3
Inflation, harmonised index of consumer prices (HICP, %) 1.1 2.8 11.4 4.3
Compensation per hour private sector (%) (a) 7.9 0.1 2.4 4.3
Wages as determined in collective labour agreements, private sector (%) 2.8 2.2 2.9 3.4
Purchasing power, static, median all households (%) 2.5 0.3 -6.8 0.6
People in poverty (level in %)(b)   5.7 6.7 7.6
Labour market
  2020 2021 2022 2023
Labour force (%) 0.4 0.9 1.7 1.4
Active labour force (%) 0.0 1.5 2.5 0.9
Unemployment (in thousands of persons) 465 408 340 390
Unemployed rate (% of the labour force) 4.9 4.2 3.4 3.9
Employment (hours, %) -2.8 3.3 5.2 0.4
Other items
  2020 2021 2022 2023
Labour share in enterprise income (level in %) 76.3 74.5 75.0 73.8
Labour productivity private sector (per hour, %) -1.5 2.5 -0.4 0.8
Private savings (% of disposable household income) 12.8 11.5 6.1 4.8
Current-account balance (level in % GDP) 7.1 9.0 7.2 7.4
Public sector
  2020 2021 2022 2023
General government financial balance (% GDP) -3.7 -2.6 -0.9 -1.1
Gross debt general government (% GDP) 54.7 52.4 48.8 47.1
Taxes and social security contributions (% GDP) 39.9 39.7 39.2 38.4
Gross government expenditure (% GDP) 48.2 47.0 45.6 44.4

(a) The NOW wage cost subsidy, and the continuity contribution to health care, have an upward effect on the wage mutation in 2020 of 3.3%-points and a downward effect of 2.0%-points in 2021 and 1.2%-points in 2022.

(b) The ratio of the number of persons in households below the poverty line and the total number of persons. The modest-but-adequate budget of the Social and Cultural Planning Office has been used as the poverty line.