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Netherlands Country Risk Report Q3 2018

Netherlands Country Risk Report Q3 2018

An already low unemployment rate, a declining labour force, record reliance on external demand, and no more room for monetary stimu-lus, all suggest that the Netherlands' economy will slow sharply next year. Real GDP growth looks set to come in at an impressive 3.2% in 2017, but we maintain our forecast for the economy to grow by a much-more sustainable 2.4% in 2018, and for growth to average 1.4% over the next decade.

Mark Rutte was able to form his third government in October 2017, a record of 208 days after the election on March 15. The new government took the reins after a swearing in session with King Willem-Alexander on November 26. The new four party coalition has the slenderest possible majority, holding 76 of the 150 seats in the lower house of parliament, which is likely to make policy formation problematic. We have downwardly revised the Netherlands' Short-Term Political Risk Index, although the country continues to score strongly from a global perspective.


Executive Summary
Core Views
Key Risks
Chapter 1: Economic Outlook
SWOT Analysis
BMI Economic Risk Index
Economic Growth Outlook
Above Trend Expansion Will Cool
GDP By Expenditure Outlook
Private Consumption To Outperform As Savings Rate Declines
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
Outlook On External Position
Strong External Accounts Here To Stay
TABLE: CURRENT ACCOUNT BALANCE FORECASTS
Monetary Policy
ECB Plays Waiting Game
Structural Fiscal Position
Fiscal Balance Masks Underlying Weaknesses
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES
TABLE: FISCAL AND PUBLIC DEBT FORECASTS
Currency Forecast
EUR: Near-Term Strength To Give Way Gradually
TABLE: BMI EUROZONE CURRENCY FORECAST
Chapter 2: 10-Year Forecast
The Dutch Economy To 2027
Increasingly Reliant On Productivity Driven Growth
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Chapter 3: Political Outlook
SWOT Analysis
BMI Political Risk Index
Domestic Politics
Populist Forces Remain A Significant Political Risk
Foreign Policy
Social Democratic Party Decline: Short-Term Blip Or A Change In Politics?
Chapter 4: BMI Global Macro Outlook
Key Divergences Emerging In World Economy
TABLE: GLOBAL MACROECONOMIC FORECASTS
TABLE: DEVELOPED STATES – REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y
TABLE: NETHERLANDS – MACROECONOMIC DATA AND FORECASTS

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