Netherlands outpacing European economic growth

The European economy is continuing its steady growth, and for the first time in a long time all EU countries saw economic growth. The European Commission expects that the EU economy will grow by 1.7 percent this year and 1.8 percent in 2018. The Netherlands is outperforming the EU average with expected economic growth of 2.1 percent this year and 1.8 percent in 2018, the Volkskrant reports.

The economic forecasts for the EU and its Member States were presented on Thursday. At the presentation European Commissioner Valdis Dombrovskis (Euro) pointed out large differences in the economic forecasts for different Member States. Countries that implemented significant cutbacks in recent years - the Netherlands, Greece, Cyprus, Ireland, Spain, Estonia, Slovakia - are now doing strikingly better both financially and economically than those who delayed their budget cuts. 

Despite the continued growth, there are still areas of concerns, the EC added. Investments remain low, which stands in the way of further growth. And despite the decline of unemployment, the unemployment rate of 9.4 percent is still very high. That amounts to 15.5 million unemployed people in the eurozone. 

On the plus side, the EC is expecting more political rest now that the Dutch and French elections are over, and in neither country did the right-wing populist party come out on top. "The wave of populist ideas seems to have subsided. Although the feeling of losing out to technological renewal and globalization, which feeds populism, has not disappeared", according to the Commission.

The forecasts for the Netherlands are about the same as what central planning office CPB estimated at the end of March. The Netherlands is expected to have a budget surplus of 0.5 percent this year and 0.8 percent next year. Government debt will fall to 59.8 percent this year, just below the 60 percent limit prescribed by the Stability Pact. Economic growth is particularly driven by consumer spending. And after years of moderation, wages are rising again, more people have jobs and home values are increasing. 

The Commission warns the Netherlands that wage costs are increasing more than the productivity of workers, which makes exports more expensive.