Dutch central bank expects 2.3 pct economic growth this year

Dutch central bank DNB expects the Dutch economy to grow by 2.3 percent this year, according to an estimate the bank published on Monday. This is a much higher growth than the 1.9 percent growth expected in the bank's previous estimate published in June last year, ANP reports.

For next year DNB expects economic growth of 1.7 percent, lower than the 2 percent growth expected in the previous estimate. In 2015 and 2016 the Dutch economy grew by 2 and 2.1 percent respectively.

According to the bank, the economic growth will result in "significant improvement" in the public finances. The government budget deficit of 0.2 percent of GDP in 2016 will turn into a budget surplus of 0.2 percent in 2018. This year the government debt will shrink to 59.3 percent of GDP and next year to 56.5 percent. Inflation is expected to rise from 0.1 percent in 2016 to 1.4 percent this year, and then back down to 1.3 percent in 2018.

DNB also continues to be "positively surprised" by the labor market. Unemployment will drop to 5.5 percent of the labor force this year and next year to 5.3 percent, according to the forecast. And employment opportunities will grow by 1.3 percent this year and 1 percent next year. 

The Netherlands can continue to benefit from the improving global economy - 3.2 percent growth expected this year and 3.7 percent next year. But uncertainty surrounding new American president Donald Trump's policies, the impact of the Brexit and imbalances in the Chinese economy may all have negative impact on global growth. "The negative effects of potentially increasing protectionism and patriotism will likely mostly show on the longer term", DNB predicts.