Rabobank expects little growth for Dutch economy in coming years

The Dutch economy will barely grow in the coming years, according to a quarterly report from Rabobank. After the expected growth of 4.2 percent this year, the economy will grow by 0.6 percent next year. In 2024, economic growth will be 1 percent, according to the forecast by RaboResearch.

Rabobank spoke of “impressive recovery growth” after the coronavirus pandemic in the first months of this year. After that, growth stalled in the third quarter. According to the experts, that will also be the case in the final quarter of 2022.

The economy has reached its limits this year, Rabobank economist Nic Vrieselaar said. He pointed out that there are staff and equipment shortages everywhere. According to him, production capacity is also at its limit. “That leaves little room for further growth. At the same time, high inflation and increased rates are putting pressure on consumer and business spending, both in the Netherlands and at major trading partners.”

According to the economist, these facets together will cause shrinkage. “But the government actually wants to stimulate the economy. Due to these opposing forces, we expect the Dutch economy to end up in a ‘muddling through’ mode, with neither strong contraction nor strong growth.”

According to the quarterly report, consumer prices will continue to rise. After the inflation of 11.6 percent this year, next year will see a monetary depreciation of 4.2 percent. Energy may not become much more expensive due to the price cap, but that does not apply to other products, the bank said. Inflation will be just under 6 percent in 2024 because the price cap will then be phased out again.

Rabobank also stated that unemployment is rising but will remain low. Rising unemployment is partly due to companies still having to close their doors in the aftermath of the coronavirus pandemic.

Rabobank believes that companies and consumers will continue to keep an eye on all the little expenses in the coming period. That has everything to do with the high inflation. Government spending will increase sharply, although the tight labor market will also impact the Cabinet’s plans.

Finally, Rabobank expects that investments in the construction and renovation of homes will put the brakes on the economy. Due to the rising interest rates, falling house prices, and the decreasing number of home sales, housing construction will decrease, according to the bank.