Dutch economic growth in 2023 will be minor, says ING

The Dutch economy will grow by a modest 0.4 percent next year, ING economists expect. That estimate is even lower than what the International Monetary Fund predicted on Friday. Analysts at the Dutch bank have predicted a lean year due to the weaker global economy and continued price increases. Inflation may seem to have passed its peak, but it is expected to remain high in 2023 as well. Additional government spending will especially drive growth, the economists believe.

There will also be price increases in raw materials, transport, and energy next year, according to ING. Wages will also rise. The agreements on the energy cap will keep inflation down, experts expect. But households will not have more room to make additional purchases due to increased costs. The housing market will also continue to suffer from difficult conditions.

In general, the economy contracted in the third quarter of this year and is also expected to shrink in the final quarter of this year and at the beginning of next year. The recovery will start over the course of 2023, ING believes. This will be mainly because the government is boosting the economy with its "expansive fiscal policy", according to experts.

According to the coalition agreement, government spending will increase by around 17 billion euros. The Rutte IV Cabinet promised to invest more money in sustainability, better education, and housing construction.

"In addition to the coalition agreement plans, there is also the effect of the very extensive purchasing power package. The energy price cap is potentially the largest part of this," said ING. The exact costs for The Hague depend on the development of energy prices.

Despite the meager economic growth, ING expects unemployment to rise only slightly to over four percent. The combination of a tight labor market and the prospect of a short mild recession will force many companies to try to retain staff. In addition, there will be more vacancies, particularly in the government sector, which in turn should compensate for job losses in the market.