Growth forecasts raised as economy strengthens

11th August 2004, Comments 0 comments

11 August 2004 , AMSTERDAM — The Dutch economy is performing above expectation, with new figures from the Central Planning Bureau (CPB) indicating that growth will be higher next year than forecast two months ago.

11 August 2004

AMSTERDAM — The Dutch economy is performing above expectation, with new figures from the Central Planning Bureau (CPB) indicating that growth will be higher next year than forecast two months ago.

In April, the CPB forecast economic growth of 1.25 percent for next year, but sources said the latest — but still confidential — figures give an estimated growth rate of 1.5 percent, news agency ANP reported. The government encountered a string of negative economic forecasts in 2003 and earlier this year.

The Cabinet uses the growth forecasts to draw up its annual budget, which is delivered on Prinsjesdag in The Hague on the third Tuesday in September. Despite attributing the higher growth forecast next year to a global economic recovery, the official Dutch economic growth forecast for 2004 remains unchanged at 1.25 percent.

The CPB has reportedly sent its new figures to the Cabinet for discussion, with the warning they could still be subject to change. Government ministers will now discuss whether previously announced budget cuts will be reduced.

The small economic recovery — which comes after the economy slipped into a nine-month recession last year, having steadily stagnated since the boom of the late 1990s — is also reflected in unemployment forecasts, purchasing power and the budget deficit.

In June, the CPB said it expected jobless numbers to rise to 520,000 this year, but this forecast has been reduced to 505,000. For next year, the forecast has been reduced from 565,000 to 550,000, or 7 percent of the workforce, newspaper De Volkskrant reported.

The expected fall in purchasing power has been reduced by 1 percent, both for this year (0.25 percent) and next (1 percent). But minimum wage earners will still lose 2 percent of purchasing power, as previously forecast.

The budget deficit was expected to hit 3 percent of Gross Domestic Product (GDP) this year, but that forecast has been reduced to 2.8 percent, signifying a EUR 1 billion boon for the Cabinet. And rather than the 2.7 percent forecast for 2005, that has now been reduced to 2.7 percent.

Based on these latest forecasts, the Netherlands may escape breaching the eurozone's Growth and Stability Pact which requires national deficits to remain under 3 percent of GDP to maintain the strength of the euro currency.

Finance Minister Gerrit Zalm announced additional savings of EUR 3.75 billion earlier this year on top of a record EUR 17 billion in budget cuts unveiled last September to prevent possible repeat breaches of the pact's regulations. The Dutch budget exceeded the 3 percent limit in 2003.

[Copyright Expatica News 2004]

Subject: Dutch news

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