The Netherlands boasts a relatively sanguine near-term economic growth outlook as a result of solid domestic demand conditions. Household disposable incomes are set to rise over the coming quarters following the passage of fiscal stimulus measures by the government in 2015, and this should keep the ongoing recovery in the residential real estate market on track. However, net exports will act as a slight net drag on growth as middling external demand conditions continue to weigh.
The Netherlands is likely hold an early parliamentary election in 2016, as the ruling centre-right VVD seeks to gain new coalition partners despite a significant decline in its popularity. The rise of the nationalist PVV will likely serve to draw other centrist parties together, and boost their willingness to cooperate in forming a coalition government, while isolating the PVV from power. Nevertheless, the PVV is likely to achieve a significant boost in seats in the new parliament.
Major Forecast Changes
We have downgrade the Netherlands' 2016 real GDP growth forecast to 2.0%, from 2.5% previously, following a poorer than expected performance in Q116.
The Netherlands' trade outlook would face significant ramifications if the UK were to vote 'yes' on Brexit. Such a scenario could also significantly bolster eurosceptic sentiment both within the Netherlands and in neighbouring EU states. In any case, the country will remain highly vulnerable to the long-term structural woes of the eurozone economy, suggesting significant currency and trade-related risks.
|Nominal GDP, USDbn||879.3||752.6||742.0||785.6|
|Real GDP growth, % y-o-y||1.0||2.0||2.0||1.8|
|Consumer price inflation, % y-o-y, eop||-0.1||0.5||1.0||1.4|
|Exchange rate EUR/USD, eop||0.82||0.92||0.91||0.87|
|Budget balance, % of GDP||-2.2||-2.0||-1.9||-1.5|
|Current account balance, % of GDP||10.2||9.8||9.3||8.8|
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