Netherlands: Country Economic Forecast: 30 Jan 2012Oxford EconomicsJanuary 30, 2012 10 Pages - SKU: OFE6788885 |
| Countries covered: Netherlands The short-term outlook remains challenging. While December's business surveys showed some evidence of improvement in other core Eurozone countries, data for the Netherlands have been more gloomy. The NEVI manufacturing PMI for December was only marginally higher than November's two-and-a-half year low, while surveys of consumer sentiment have continued to deteriorate. We estimate that the Dutch economy entered recession in 2011H2 and it appears likely to contract again in 2012Q1. Short-term prospects remain heavily dependent on the outcome of the sovereign debt crisis, with the openness of the Dutch economy meaning it has been particularly vulnerable to the slowdown in export demand. The situation has been compounded by the weakness of domestic demand, particularly the consumer sector, which has been able to offer no offset to external weakness. Our forecast assumes that the external outlook improves over the second half of the year, laying the ground for a wider recovery. Under these circumstances, GDP is forecast to decline by 0.1% in 2012 overall, before recovering to grow 1.7% in 2013. However, the risks remain heavily skewed to the downside, with the key risk being an escalation of the Eurozone financial crisis, including disorderly sovereign defaults. Such an outcome would result in a much deeper and more prolonged recession in the Netherlands, given the likely impact on the Dutch banking system and on export prospects. |
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