The Netherlands is not all bad when it comes to the financial system. That’s the conclusion of the Central Planning Bureau in a report released today. Especially since Dutch banks are better off than American ones, and this makes macroeconomist Edin Mujagic happy. “We’re bombarded with negative reports and facts these days, so it’s really a relief.”
The CPB also predicts that there is almost no chance of a repeat of the US banking situation in the Netherlands, with bankruptcies and forced takeovers. “In general, our companies are also in a good position and, very importantly: the adaptability of these companies is very strong,” explains Mujagic. “These are all things you want to have when the economy is down.”
“These are all things you want to have when the economy is down”
Because, according to Mujagic, this should not be forgotten: the economy is still not going as hoped. The CPB therefore also takes into account that a small recession could still follow. And that’s mainly related to high inflation, Mujagic thinks. “As a result, the European Central Bank (ECB) is still grappling with the question of how much interest rates should be raised,” he explains. ‘A higher interest rate is good in the medium term because it will contain inflation. But in the short term it can cause problems here and there.’
Ditch support
According to Mujagic, it will also be necessary to look at the reduction of the ‘support ditch’ that Dutch businesses and households have received in recent years. “That support needs to be phased out now that circumstances have returned to normal,” she continues. «The CPB agrees, but they say that reducing too quickly carries risks. So it’s a delicate game.’
A game quite subject to external factors, concludes the CPB. Even if the Netherlands has everything in order, such as banks and a low national debt, the Netherlands can suffer from European countries that do not have their affairs in order. ‘We are still a small open economy.’
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
