Full forecasts for Netherlands

19. THE NETHERLANDS
Economic recovery takes shape after two years of recession
Economic growth turned positive in the second quarter of 2013 and is projected to gain momentum in
2014 and 2015. Driven mainly by investments in 2014, growth will accelerate in 2015 thanks to rising
household consumption. Unemployment is set to level off before slowly decreasing at the end of the
forecast horizon. The budget deficit of the government will remain close to 3% of GDP.
2013: the economy turning
In 2013, real GDP contracted by 0.8% due to weak
economic activity in the beginning of the year and
the negative impact of contraction in 2012. The
quarter-on-quarter economic growth turned
positive in the second and third quarters and
strengthened significantly in the fourth quarter.
Growth of 0.7% was partly driven by exceptional
factors, such as high investment in vehicles in
anticipation of a change in taxation as of this year.
In 2014, quarterly growth is projected to remain in
positive territory, albeit with modest quarterly
increases. Real GDP growth is forecast to reach
1.0% in 2014.
The forecast improvement of the economic
situation in the euro area provides a boost to Dutch
exports, which are expected to grow by 2.9% in
2014 compared to 1.3% in 2013. Imports would
pick up in line with final demand. Net exports are
expected to show a higher contribution to
economic growth in 2015.
Graph II.19.1: Netherlands - Real GDP growth and
contributions
3
pps.
forecast
2
1
0
-1
The fragile transition towards positive growth in
2013 was chiefly supported by net exports. By
contrast, domestic demand remained a drag on
activity, despite gross fixed capital formation
rebounding in line with an improved business
outlook, and is projected to remain sluggish in
2014. Private consumption will be still held back
by the unfavourable development of employment
and the incurred negative wealth effects over the
past years. However, from the second half of 2013,
onwards, soft indicators, including consumer
confidence, have shown an almost continuous
improvement, which support an improved
economic outlook. In 2014 domestic demand is
expected to gradually move towards positive
territory and to overtake net exports as the main
growth driver. In particular, investments are
picking up, especially in the private sector.
-2
-3
-4
09
10
Inventories
11
12
Dom. demand, excl. invent.
13
14
Net exports
15
Real GDP (y-o-y%)
Risks to the macroeconomic scenario stemming
from domestic developments are predominantly on
the downside. Higher than expected uncertainties
on the policy side regarding the implementation
and effects of foreseen measures, in particular
related to health care and the labour market, may
hamper the expected recovery of domestic
demand. However, a faster stabilisation of the
housing market could provide an additional boost.
Initially rising unemployment, subdued inflation
Private consumption is forecast to continue
shrinking, but at a rate of 0.5% the decline is much
lower than in the past three years. Private
consumption is projected to bottom out towards
the end of 2014, reflecting the positive effects
stemming from a gradually recovering housing
market as well as from lower taxes on labour and
lower pension and health care premiums.
Following several years of negative developments,
real disposable income is expected to modestly
increase.
84
Unemployment rose sharply in the beginning of
2013 as a result of declining employment coupled
with an increase in labour supply ("added worker
effect"). Since mid-2013, the unemployment rate
has been relatively stable but mainly due to a
supply effect, as unemployed massively retreated
from the labour market in response to negative
prospects for an economic recovery ("discouraged
worker effect"). The unemployment rate reached
6.7% in 2013. In view of the lagged response of
the labour market to the cycle, the employment
Member States, The Netherlands
outlook
remains
fairly
negative.
The
unemployment rate is forecast to increase in 2014
to 7.4%, mainly as a result of negative
employment developments in the government and
health care sectors. The unemployment rate is
projected to only ease slightly in 2015, to 7.2%.
In 2012 and most of 2013, HICP inflation stood
close to 3%, notably due to higher energy prices
and the increased VAT rate as of October 2012. In
October 2013, inflation fell markedly to 1.3% as
the previous energy and tax increases dropped out
of the figures. In line with the slow pickup in
domestic demand over the forecast horizon,
inflation is expected to ease further to 1.1% in
2014 before increasing slightly to 1.3% in 2015.
Deficit just below 3% of GDP in 2015
In 2014, the general government deficit is expected
to rise slightly to 3.2% of GDP, from 3.1% in
2013. This rise masks ongoing fiscal tightening, as
the 2013 headline deficit figures benefited from
positive one-offs (notably the sale of 4G telecom
licenses). Despite an additional consolidation
package of around 1% of GDP, the 2014 general
government deficit would slightly worsen in
nominal terms, reflecting sluggish economic
activity and the non-recurrence of temporary fiscal
measures impacting 2013. In addition, the decision
to lower natural gas production in the coming
years is expected to have a limited deficitincreasing impact of about 0.1% of GDP in both
2014 and 2015. On the back of ongoing
consolidation
efforts
and
the
expected
improvement in economic activity, the headline
deficit is forecast to decline to 2.9% of GDP in
2015. Following an improvement of 0.9% of GDP
in 2013, the structural balance is expected to
stabilise in 2014 and 2015. The gross government
debt ratio is expected to increase from 74.3% of
GDP in 2013 to around 75.6% of GDP in 2015.
Risks to the fiscal forecast mirror uncertainties on
the macroeconomic outlook. However, there are
also risks for the expected revenue from some of
the fiscal measures in 2014 (notably the temporary
tax reduction on accrued severance payments) and
planned expenditure savings in 2015.
Table II.19.1:
Main features of country forecast - NETHERLANDS
2012
GDP
Private Consumption
Public Consumption
Gross fixed capital formation
of which: equipment
Exports (goods and services)
Imports (goods and services)
GNI (GDP deflator)
Contribution to GDP growth:
Annual percentage change
bn EUR Curr. prices
% GDP
94-09
2010
2011
2012
2013
2014
2015
599.3
100.0
2.4
1.5
0.9
-1.2
-0.8
1.0
1.3
273.3
45.6
2.0
0.3
-1.1
-1.6
-2.1
-0.5
1.0
170.6
28.5
2.8
0.5
0.2
-0.7
-0.7
0.3
-0.9
102.0
17.0
2.5
-7.4
6.1
-4.0
-4.9
5.7
3.1
35.8
6.0
3.8
-3.0
9.5
1.5
-5.0
5.7
4.0
527.6
88.0
5.4
11.6
4.1
3.2
1.3
2.9
5.0
477.2
79.6
5.6
10.3
4.2
3.3
-0.5
3.2
5.0
605.0
100.9
2.2
2.4
2.8
-0.6
-0.9
1.0
1.3
2.2
-1.1
0.6
-1.7
-2.0
0.7
0.7
0.0
1.1
0.1
0.2
-0.3
0.2
0.1
0.2
1.6
0.2
0.2
1.5
0.1
0.5
1.0
-0.6
0.5
-0.3
-1.2
-0.4
0.6
4.4
4.5
4.4
5.3
6.7
7.4
7.2
3.3
1.5
1.6
1.9
0.2
1.9
1.3
2.0
-0.6
1.2
2.9
-0.3
0.5
0.6
-0.2
-1.4
0.0
1.5
-2.0
-0.3
-1.6
14.5
10.5
11.6
10.7
10.2
10.9
11.0
2.2
0.8
1.1
1.3
1.7
0.8
2.2
2.1
0.9
2.5
2.8
2.6
1.1
1.3
0.5
-1.4
0.2
-0.4
1.1
-0.1
1.0
6.3
7.1
7.5
7.7
9.3
9.1
9.8
5.9
5.0
7.4
7.7
9.2
9.1
10.0
Domestic demand
Inventories
Net exports
Employment
Unemployment rate (a)
Compensation of employees / f.t.e.
Unit labour costs whole economy
Real unit labour cost
Saving rate of households (b)
GDP deflator
Harmonised index of consumer prices
Terms of trade goods
Trade balance (c)
Current-account balance (c)
Net lending (+) or borrowing (-) vis-a-vis ROW (c)
General government balance (c)
Cyclically-adjusted budget balance (c)
Structural budget balance (c)
General government gross debt (c)
5.6
4.5
7.0
7.4
8.9
8.2
9.9
-1.3
-5.1
-4.3
-4.1
-3.1
-3.2
-2.9
-1.2
-4.3
-3.7
-2.7
-1.2
-1.7
-1.8
-
-4.1
-3.7
-2.7
-1.8
-1.8
-1.8
59.0
63.4
65.7
71.3
74.3
75.3
75.6
(a) Eurostat definition. (b) gross saving divided by gross disposable income. (c) as a percentage of GDP.
85

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