Monday, 7 December 2015 - 14:16
Netherlands Bank: Refugees lift Dutch economy; Growth to slow
With reporting by Zack Newmark. Update, 3:30 p.m., 7 December 2015: More details from the report were added to the initial article. An exploratory analysis by the Dutch central bank (DNB) predicts that the influx of refugees will have a small positive effect on the Dutch economic growth in the short term, especially on the spending effect due to higher government expenses. The organization predicts the Netherlands will take in a total of 160,000 people seeking asylum from 2015 through 2017, with roughly 80 percent gaining legal refugee status, the DNB said in its December report, "Economic Outlook and Prospects." The DNB thinks the influx of refugees could result in a .14 percent increase in GDP by 2017 based on expected figures in government spending, the labour market, housing investment and consumer confidence. "The final impact on public finances and the labor market is primarily determined by the employment of refugees, their duration and accessibility of public services," the DNB pointed out. Additional government spending on refugees in the areas of community services, housing, legal aid, social care and welfare will drive an increased economic impact. "Further positive economic effects due to increased participation of asylum seekers in the labor market are also expected to take place only after some time passes," the bank added. However the bank expects that the Dutch economic growth will slow down somewhat next year, before showing a nice improvement. According to the bank, the growth of the gross domestic product amounts to a solid 1.9 percent this year, but this growth will fall back to 1,7 percent next year, mostly due to international tensions. It will then bounce back to 2.2 percent in 2017. DNB saw that the Dutch economy is recovering more by itself, instead of mostly depending on exports. This is evidenced by the strong recovery of domestic spending, the "surprisingly fast" recovery of the housing market and households' increasing purchasing power. The growth contribution of exports is expected to decrease over the next two years due to a downturn in world trade growth. Unemployment will show a very slight improvement, from 6.9 percent this year and next year to 6.7 percent in 2017. Inflation is expected to remain low for the time being and will only reach above 1 percent in 2017. Due to the planned tax cuts and lower gas production, the earlier decline in the budget deficit will stagnate. The bank expects that the structural budget balance will deteriorate from -0.7 percent of GDP in 2014 to -2.5 percent in 2017.