IMF positive about Dutch economic outlook, but a third of households still struggling
The Dutch economy is “remarkably resilient” despite a period of slowed growth, according to the International Monetary Fund (IMF). It expects economic growth in the Netherlands to pick up again this year and next. Many Dutch households are noticing the economic upturn in an improvement in their finances. However, about a third of them are still struggling to make ends meet, the National Institute for Budget Information (Nibud) reported.
The IMF expects inflation to continue to moderate this year and economic growth to regain momentum in 2024 and 2025, the DNB reported. However, it warned of increased uncertainties due to the economic slowdown in several of the Netherlands’ trading partners, growing geopolitical tensions, and economic fragmentation.
A big issue for the Dutch economy is the tight labor market and productivity. “Dutch unemployment remains historically low, and the vacancy rate is among the highest in the eurozone,” the IMF said, according to the Dutch central bank. “The aging population and the transition to a climate-neutral economy require more efficient use of resources and productivity growth to maintain sustainable growth.”
The fund urged the Dutch government to focus on ensuring a smooth transition for workers changing jobs and “encouraging innovation and technology adoption.”
According to budget institute Nibud, more households’ financial situation is improving. This year, 42 percent of households said they can easily make ends meet, compared to 34 percent in 2018. Nibud director Arjan Vliegenhart called that a wonderful development. But he added, “At the same time, several groups have less control over their income and benefits, which don't seem to provide the security needed to get a grip on life.”
Currently, a third of Dutch households can’t or struggle to get through the month. According to Nibud, tenants are more likely to struggle than homeowners. The same applies to households with lower or varying incomes and young adults. “All these groups are conscious of their financial affairs, but this does not remove the uncertainty.”
Vliegenhart pointed out that the Dutch government’s purchasing power protection measures, like increasing the minimum wage, clearly had an effect. But they didn’t reach all households. “You, of course, benefit more from a wage increase if you have a permanent job, and you could save more during the coronavirus if you could previously spend that money on holidays, outings, and dinners,” Vliegenhart said.
Nibud also pointed out that financially vulnerable households are typically the ones who can’t afford to make their homes more sustainable. “The energy transition is also still unmanageable for them.” And it is also mainly these households who struggle to pay their energy bills.
“In our opinion, only a fair energy transition has a chance of success. That means that the energy transition must be possible for everyone,” Vliegenhart said. “It cannot be the case that the most vulnerable households are last in line or cannot even come along at all. When it comes to social security, we see this transition as the most challenging social development that the Netherlands is currently facing.”
