185
Netherlands Economic growth is projected to slow considerably, to 1.6% in 2019 and 1.5% in 2020. A weakening external economic environment and increased international trade uncertainties are weighing on trade and investment growth. Deteriorating domestic conditions are contributing to projected labour market weakness, slow disposable income growth and tepid consumption. Fiscal space should be utilised to stimulate growth, which will also help reduce internal euro area imbalances. Labour market reforms, such as expanding supplementary social security coverage for the self-employed and improving the fairness of the tax system, would improve inclusiveness and protect the job security of vulnerable workers. Heightened uncertainty and weak external demand are weighing on growth Economic growth has weakened significantly. A sharp reversal in external demand throughout the second half of 2018 is having a large negative impact on trade growth and industrial production. Business confidence remains subdued and consumer confidence has been falling rapidly. Business investment slowed throughout the second half of 2018 and remains volatile. Slowing investment and a shrinking net trade balance pushed the current account surplus to nearly 12% of GDP in end-2018. Private consumption has been robust, largely reflecting current labour market strength. Low unemployment and diminishing labour market slack are putting upward pressure on wages. Headline inflation has risen sharply reflecting the increased VAT rate, but core inflation is slowing somewhat. Housing price growth has moderated, following the increase in recent years.
Netherlands Housing prices are peaking and confidence is deteriorating Balance, s.a.¹ 30
Industrial production has fallen
Y-o-y % changes 15.0
Y-o-y % changes¹ 6
← Consumer confidence
25
12.5
5
20
10.0
4
15
7.5
3
10
5.0
5
2.5
1
0
0.0
0
-5
-2.5
-1
-10
House prices →
2015
2016
2017
2018
-5.0
0
2
2015
2016
2017
2018
-2
1. Three-month moving average. Source: Statistics Netherlands (CBS). StatLink 2 https://doi.org/10.1787/888933934774
OECD ECONOMIC OUTLOOK, VOLUME 2019 ISSUE 1: PRELIMINARY VERSION © OECD 2019