New uncertainties after strong economic recovery, 2022 growth revised downwards

Gross domestic product is expected to grow by 4.5 percent this year, but growth for 2022 has been revised downwards due to the new hard lockdown, De Nederlandsche Bank (DNB) reported in new estimates on Monday. “If we assume that the lockdown will gradually be phased out at the end of the first quarter, growth will be 2.2 percent next year,” says DNB director Olaf Sleijpen at the presentation of the report Economic Developments and Outlook. Fidelity. Previously, 3.6 percent growth was expected for 2022.

The central bank reports in the report Economic Developments and Outlook that the economy has recovered quickly and vigorously from the corona recession of 2020. Economic growth in the Netherlands is expected to reach 4.5 percent this year. That is significantly higher than the central bank expected in June. “As of this spring, society was more open again. The resulting increased household consumption, combined with the additional government spending, made the economy grow so strongly in 2021,” the central bank reports in a news release. on its own website. In 2020, the economy shrank by 3.8 percent.

‘Inflation will peak at the end of this year’; shortages of raw materials and materials push up prices

The central bank expects inflation to reach 2.7 percent for the whole of 2021. The inflation rose rapidly, especially in recent months, mainly due to the worldwide rise in energy costs. Inflation is expected to peak at the end of 2021. This is partly because from January 2022 the energy bill of families will decrease due to the compensation scheme of the government, the bank explains in a news item.

DNB expects inflation to remain high next year, at 3 percent. “The worldwide shortages of materials will not be made up so quickly. We do not expect this until the end of 2023. And as long as the demand is so much greater than the supply, you will see this reflected in higher prices, and therefore inflation,” said DNB in ​​the news item. .

‘Scarcity of suitable personnel is becoming more and more pressing’

DNB reports that the labor market has become very tight again shortly after the corona recession. Unemployment hit a low this year at 3.3 percent. That will increase to 3.4 percent next year and to 3.5 percent in 2023, the bank thinks. “(..) The scarcity of suitable personnel is becoming increasingly difficult. This requires a broad package of measures for the supply and demand side of the labor market, aimed at stimulating labor participation and labor mobility. It is important that the new cabinet and the social partners are quickly addressing the issue of labor market shortages; there is also a role here for the Social and Economic Council and the Labor Foundation,” said the bank in the report Economic Developments and Prospects.

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