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Interestingly enough, food prices account for 0.5%-point of inflation, while a year ago food prices did not contribute to inflation at all.
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All in all though, most monthly data point to solid underlying growth in the third quarter of this year.įigure 1: Strong consumption growth Source: Statistics Netherlands (CBS) Figure 2: PMI reaches second highest level ever Source: Markit Core inflation remains low Figure 3: Low core inflation Source: Statistics Netherlands (CBS)ĭutch inflation (HICP) in September slightly declined to 1.4% (figure 3). A factor which could negatively contribute to GDP growth is natural gas production, which strongly declined in the last few months. The PMI reached 60.4 in October, the second highest level since measurements began seventeen years ago. In addition the manufacturing PMI point to high growth. Higher household disposable income and historically high consumer confidence are both supporting consumption growth.Įxport volumes increased m-o-m in August (own seasonal adjustment), while growth momentum is currently high. The volume of household consumption decreased with 0.4% m-o-m in August, but growth momentum (3m/3m change) remained strong at 0.9% (figure 2). Recent monthly economic data suggest that GDP growth in the third quarter could be higher than our current estimate of 0.5%. Mostly positive signs for GDP growth in 2017Q3 According to the Bureau for Economic Policy Analysis (CPB) because of the package of measures proposed in the coalition agreement the forecasted fiscal balance in 2021 will deteriorate from 1.6% to 0.5% Nevertheless, that still leaves a balanced budget and, thanks in part to higher GDP, the CPB forecast that the debt-to-GDP ratio will continue to decline to 45.8% in 2021. The plans do have a negative impact on the government fiscal surplus. Together the plans should modestly improve the potential output of the Dutch economy. In our next forecast round we will include these effects. Significant additional spending is planned on education, defence and domestic security, which will increase GDP growth in 2018. Other economic reforms include steps to make the labour market more flexible and measures to improve environmental policy. In our next forecast round we will make economic predictions for 2019 and assess the GDP impact of the proposed plans in more detail.
![debt to gdp ratio do you want the number low or high debt to gdp ratio do you want the number low or high](https://voxeu.org/sites/default/files/image/FromMay2014/feld31marchfig1.png)
The tax reforms are expected to be implemented from 2019 onwards, so the strongest effects on GDP (mostly due to higher household consumption) won’t be visible until 2019 at the earliest. There will be a tax reduction for households of around 5 billion euros, partly due to the implementation of an income tax system consisting of only two brackets (instead of the current four). The agreement proposes a number of reforms, most notably of the tax system. On October the 10th the new governing parties in the Netherlands released their coalition agreement to the public. New coalition: pro-growth policies, but modest fiscal deterioration
#DEBT TO GDP RATIO DO YOU WANT THE NUMBER LOW OR HIGH FULL#
We expect the Netherlands to return to full capacity in 2018, which will contribute to a slowing of growth to 2.4% in 2018 (table 1). The economy is firing on all cylinders, with consumption, exports and investments all contributing. This strong quarterly performance is a major reason why in our most recent forecast we predict growth to hit 3.3% in 2017. The second quarter showed an unusually high growth rate of 1.5% q-o-q. The Dutch economy continues to experience a strong and broad-based economic recovery. Table 1: Key data for the Netherlands Source: Statistics Netherlands (CBS), Rabobank
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