Rabobank Anticipates Mild Economic Growth in 2024 and 2025

Rabobank predicts a modest expansion of the Dutch economy in 2024 and 2025, primarily driven by purchasing power recovery. Despite this growth, it does not directly translate into a broad prosperity increase. In 2023, the overheated Dutch economy experienced three quarters of contraction, influenced by low unemployment, rapidly rising interest rates, and significantly high inflation.

However, Rabobank expects the economy to recover in the last months of the year, with a projected growth of 0.1 percent throughout 2023. The outlook for 2024 and 2025 indicates modest growth of 0.5 and 1.0 percent, respectively. Purchasing power recovery, supported by rising wages and increased working hours, will stimulate consumption and contribute to economic growth.

Impact on Broad Prosperity and Specific Sectors

While economic growth has positive effects on broad prosperity, certain sectors may be negatively affected. Corporate investments decline due to higher interest rates, and housing investments decrease due to an anticipated dip in new construction. On the other hand, the government plans to increase investments, contingent on the specifics outlined by the new cabinet.

International Trade and Uncertainties

The contribution of international trade to the Dutch economy diminishes, mainly due to an expected contraction in exports in 2024 and slower growth in 2025. Uncertainties, such as recent elections, policies of a new cabinet, and external factors like global conflicts, continue to surround economic outlooks.

Impact on the Broad Prosperity of the Dutch

Although broad prosperity encompasses more than purely economic factors, predictions for five sub-indicators (unemployment, worked hours, household income, education level, and life expectancy) present a mixed picture. Unemployment and increased working hours may have adverse effects, while positive trends in income, education level, and life expectancy contribute favorably to broad prosperity.

Uncertainties in Economic Projections

Economic forecasts are shrouded in uncertainties, including political changes, approaches to societal issues, and external events like conflicts. It remains crucial to closely monitor developments, particularly given the changing geopolitical landscape and potential unexpected events that could impact the economy.

Rabobank.nl