Experts predict a recession

15th July 2005, Comments 0 comments

15 July 2005, AMSTERDAM — Two economists have warned that the Dutch economy may be heading for a recession.

15 July 2005

AMSTERDAM — Two economists have warned that the Dutch economy may be heading for a recession.

Economists Bert de Groot and Philip Hans Franses of Rotterdam's Erasmus University said on Friday that the Dutch economy may have shrunk by 1.5 percent in the second quarter of this year when compared with the year earlier.

The Central Bureau of Statistics has reported that the economy decreased by 0.5 percent in the first three months of 2005.

Two successive quarters of economic decline within a three-quarter period qualifies as a recession.

De Groot and Franses based their prognosis that was published in an economic magazine on Friday on the CBS's figures and on data from the temporary job market.

They have created their own measuring system, the EICIE, and made use of data supplied by temp agency Randstad.

The economic slump has been brought about by lower growth in exports, and crucially a drop in consumer spending in the Netherlands.

On Thursday, figures by the European statistics agency Eurostat showed that the Netherlands has the weakest performing economy of all 25 states in the European Union.

Analysts have been quick to point the finger at lower spending by the public in the Netherlands. Dutch households have seen a drop in spending power for years. When account is taken for inflation, real disposal income fell by 1.4 percent in 2004.

The CBS estimated disposal income plummeted by 2.7 percent in 2003.

Dire warnings from the government about the need to tighten belts and rising unemployment are also seen as a major factors in persuading the public to keep its money in its collective wallet. This has led to a big rise in savings and far less consumption.

[Copyright Expatica News + ANP 2005]

Subject: Dutch news

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