Netherlands divergent from other AAA countries
By The Holland Times Mon. 13 May 2013
The economy of the Netherlands is expected to continue to contract according to a report by the International Monetary Fund (IMF). The report states that, “a highly indebted household sector, significant financial sector challenges, declining real estate prices, and weak domestic demand” are the reasons that the Dutch economy will remain in trouble and fall behind other AAA European countries.
A further decline in house prices is expected to weigh on consumer confidence and consumption, while exports to the rest of the European Area (EA) are expected to pick up only gradually against the backdrop of a slow EA recovery.
IMF directors, however, commended the Dutch authorities’ commitment to maintaining fiscal sustainability and welcomed the decision not to undertake any additional fiscal measures in 2013. In light of the ongoing economic uncertainty, most Directors recommended that fiscal policy should be more flexible, focus on structural targets, and allow automatic stabilisers to operate fully.
Directors underscored the need to remove housing market distortions and emphasized that labor market reforms as well as measures to increase productivity and raise human capital will be important to boost the economy’s growth potential.