More permanent contracts offered as economy improves
As the Dutch economy continues to improve, more permanent jobs will be offered in the Netherlands and contract wages at companies will continue to rise, according to Dutch central bank De Nederlandsche Bank (DNB), NU.nl reports.
The number of permanent jobs is already increasing, said Job Swank, director of financial stability at DNB. This year, contract wages are expected to rise by 2.1 percent, after they already rose 1.5 percent in 2018. For 2019 and 2020 the bank expects wage increases of 2.6 and 3 percent respectively.
DNB expects that the Dutch economy will grow 2.5 percent this year and then level off to 1.7 percent in 2019 and 2020. In previous estimates the bank predicted economic growth of 2.2 percent and 1.9 percent for next year and 2020. But those estimates have now been lowered due to the tight labor market, cooling world trade, and an adjustment of the expected price increases on the housing market.
This year house prices rose 9 percent in the Netherlands. The DNB expects that the price increase will be lower next year. But if this is not the case and house prices continue to rise strongly, the economic growth for next year may be around 2 percent.
According the Swank, a correction on global financial markets can not be ruled out. He emphasized that he is not predicting a further decline, but "if that correction comes, that is not something that will surprise us terribly". Global stock exchanges fell sharply over the past months. Reportedly, investors are worried about a trade war between the United States and China, as well as the already cooling world economy. Central banks are also reducing their stimulus policy. "Stock exchanges are looking for a new balance", Swank said, according to the newspaper.
In addition to the above threats, the Dutch economy may also be negatively affected by emerging economies' vulnerability to rising interest rates. Higher interest rates will curb domestic demands in emerging economies like China, but the consequences of financial turmoil will also be considerable for the Netherlands. DNB expects that if emerging economies have to pay a 1 percent higher interest rate, the Dutch economy will grow 0.5 percent and 0.3 percent less in 2019 and 2020 respectively.
In all these scenarios the DNB assumed that the European Union and United Kingdom will have an amicable separation at the end of March next year, with a deal in place that keeps the UK in a customs union with the EU. Swan emphasized that an amicable Brexit is in everyone's best interest, but added that politicians aren't always rational. He can not say what will happen if there is a no-deal Brexit.
