- Dutch economic growth expected to increase by 1.5% this year and 2.5% in 2003
- Employment will only increase by 0.5% in both years
- EMU balance likely to deteriorate to a deficit of 0.5% of GDP in 2003
Dutch economic growth stands to benefit from the expected international economic upswing in the first half of this year. GDP is expected to grow by 1.5% this year and 2.5% in 2003.
However, Dutch growth will lag behind the euro-zone average, partly due to a sharp loss of price competitiveness. The main cause of this loss of price competitiveness is the strong increase of unit labour costs, influenced by the tight labour market.
Although unemployment will grow to 3.75% this year and to 4.5% in 2003, the tightness of the labour market will still hold.
As a consequence of the lagged reactions to the business cycle, the EMU balance will probably deteriorate steadily to a deficit of 0.5% of GDP in 2003.
Inflation will fall less quickly than previously thought, and will still average 3.25% this year. A further fall, to 2.5%, is forecast for next year.
(source: Netherlands Bureau for Economic Policy Analysis)