Continued high support for the Nationalist party of Geert Wilders poses a threat to the established political parties in the upcoming elections. The result of the EU referendum vote in the United Kingdom will strengthen calls for a similar vote on the Netherlands which may be a point of contention in the formation of any coalition involving the PVV, which is likely to be among the top two largest parties.
The Netherlands economic growth is likely to slow as exports suffer from the impact of Brexit owing to the highly externally-oriented nature of the economy. This export reliance leaves the economy at risk from the potential for further shocks to EU integration. We have downgraded the Netherlands' real GDP growth forecasts for both 2016 and 2017 to 1.7% and 1.8% respectively, from 2.0% and 2.0%
Major Forecast Changes
We have downgrade the Netherlands' 2016 real GDP growth forecast to 1.7%, from 2.0% and also downgraded 2017 growth to 1.8% from 2.0%. Despite the recent acceleration in growth, Brexit poses a significant risk to the Netherlands' exports, and will also raise uncertainty over the future of the EU.
The major risk facing the economy comes from the continued popularity of the PVV, whose rise in the polls suggests they could form part of the next government following the upcoming elections. This would raise the potential for a referendum on EU membership, and could ultimately result in the country leaving the EU and the currency bloc. This would have deeply negative implications for exports.
|Real GDP growth, % y-o-y||1.0||2.0||1.7||1.8|
|Nominal GDP, USDbn||879.3||752.6||739.9||747.6|
|Consumer price inflation, % y-o-y, eop||-0.1||0.5||1.0||1.4|
|Exchange rate EUR/USD, eop||0.82||0.92||0.95||0.96|
|Budget balance, % of GDP||-2.2||-2.0||-1.9||-1.5|
|Current account balance, % of GDP||10.2||9.8||9.3||8.9|
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