Gloomier outlook for Dutch economy from OECD; Inflation to remain high till 2024

The Dutch economy will grow less than previously estimated, mainly due the inflation, which will remain high until at least the end of 2024, the Organization for Economic Cooperation and Development (OECD) warned in its annual report for the Netherlands, NOS reports.

Despite a 0.2 percent contraction in the third quarter, the OECD expects the Dutch economy to grow by 4.2 percent for the whole of 2022. The Dutch economy performed well in the first half of the year. Next year, the economic growth will amount to only 0.8 percent and then 1.1 percent in 2024.

According to the OECD, inflation based on the European calculator will amount to 15.4 percent in the last months of this year. In 2023, that will drop to 9.5 percent, and then to 4.2 percent in 2024. While inflation is decreasing, it is still far above the average for the Netherlands in recent years.

The OECD also criticized the Dutch government’s plan to introduce a price cap on energy from January 1. According to the organization, the price cap benefits too many households. “The price ceiling should be used more for households with lower incomes and should stimulate energy saving more.”

The price cap will cost the Dutch government billions, and partly because of that, the budget deficit will rise to 3.4 percent this year, the OECD said. A year later, the deficit will drop to 2.4 percent.