Inflation in the Netherlands will remain stubbornly high for now, Rabobank economists note in a new report on the Dutch economy. They point out that consumer energy prices next year are likely to exceed the current government energy price cap. They also believe that economic growth will decline sharply next year.
The energy price cap has recently put household energy bills under pressure. Prices on the gas market are also nowhere near as high as they were right after the Russian invasion of Ukraine.
For the whole of 2023, economists predict inflation of 5 percent. Next year, the increase in the general price level is likely to decrease only slightly to 4.4%, Rabobank experts warn.
In their estimate, they assume that the government will continue to apply the price cap in 2024, but with higher price caps. This means that wage increases cannot prevent households from experiencing a loss of purchasing power for the time being.
Economists are wary of their predictions. ‘Of course, this expectation is surrounded by great uncertainty, because it is difficult to predict the volatility of oil, gas and electricity prices and we also do not know exactly whether and, if so, with what measures the government will support households and businesses next year.
However, the Netherlands is not now in an economic downturn, according to the report. This is because the Dutch economy performed better in the last quarter of last year than initially expected. “The decline in household spending that we expected given high inflation has not materialised,” explains RaboResearch economist Michiel van der Veen.
For 2023, economists expect relatively strong economic growth of 2%. Next year, however, growth will weaken significantly, reaching +0.9%. This is said to be partly because companies continue to struggle with staff and material shortages and a slump in housing construction.
Source: BNR
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