Netherlands Economic Forecast

Netherlands Economic Outlook

July 24, 2018

The momentum seen in the first quarter is expected to have largely carried over into the second quarter. Throughout Q2, consumer confidence remained at high levels, while the unemployment rate remained at a near-decade low in June. This should have translated into healthy household consumption, which is likely to have received a further boost from a wealth effect generated by robust growth in home prices. In addition, the manufacturing PMI remained well in expansionary territory in June, despite easing on softer employment growth. On the flipside, low unemployment is likely creating capacity constraints. This comes after growth in the first quarter was driven by robust consumer spending underpinned by a tight labor market and moderate inflationary pressures; however, the external sector performed poorly, with exports contracting quarter-on-quarter. In July, consumer confidence remained elevated, suggesting that private consumption will continue to spearhead the economy in the third quarter.

Netherlands Economic Growth

Robust domestic demand should keep economic momentum afloat this year. Rising wages and low unemployment are seen supporting private consumption, while favorable business conditions are expected to buttress fixed investment. However, moderating economic growth in the EU and the escalation of trade tensions between the EU and the U.S. are likely to drag on export growth going forward. Moreover, uncertainty surrounding Brexit and the effects of Italy’s new government on the wider EU economy further cloud the outlook. Met the why particular Consensus Forecasts panelists pencil in 2.6% growth for 2018, which is down 0.1 percentage points from last month’s forecast. Next year, the panel expects the economy to expand 2.1%.

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Netherlands Facts

Bond Yield0.445.70 %Aug 14
Exchange Rate1.130.65 %Aug 15
Stock Market553-0.57 %Aug 15

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