Compared to other euro countries, the Dutch economy has come through the corona pandemic well. This morning the Central Planning Bureau (CPB) already concluded that the Netherlands has come through the crisis relatively well, this afternoon the international community, through the IMF, followed with a positive assessment.
The Dutch economy was already in a robust state before corona and with the extensive government support packages and the high degree of digitization, the recession in 2020 was mild. The economy subsequently recovered strongly, unemployment remained low and few companies went bankrupt. This is the conclusion of the International Monetary Fund (IMF) in its country report on the Netherlands.
The IMF expects economic growth of 3.8 percent in 2021, and is forecast at 3.2 percent for 2022. These are growth percentages in line with the projections of the CPB (3.9 and 3.5 percent respectively).
The IMF understands that the government is phasing out broad support measures such as NOW. Strong economic growth justifies less support and helps to address labor market tensions and staff shortages. However, the government can prevent them from getting into trouble and falling over after the support has ended by means of targeted support and assistance to vulnerable but profitable companies.
The IMF also points to two weak links in the Dutch economy: education and the housing market.
Compared to other EU countries, the Netherlands invests little in primary education. The ratio of the number of teachers to the number of pupils in primary and secondary education is significantly lower than the European average. In times of corona, this resulted in more inequality of opportunity and lower school performance for vulnerable children. The National Education Program that the cabinet announced in July, whereby 8.5 billion euros will be invested in education over the next 2.5 years, is therefore more than welcome, according to the IMF.
The housing market is another bottleneck. During the corona crisis, the tightness in the housing market has only increased and house prices have risen, driven by the limited supply and low interest rates. According to the IMF, tightening of the mortgage requirements and phasing out the mortgage interest deduction are necessary, in addition to tax measures such as taxing rental income in box 1 and house and mortgage in box 3.
The IMF also sees that the Netherlands must make an extra effort to achieve the climate goals. Halving greenhouse gas emissions by 2030 and reducing them by 95 percent by 2050 requires additional measures such as pricing CO2 emissions and tackling agricultural emissions, the IMF report concludes.
IMF: economy has emerged from crisis well, more effort required for schools, housing, climate
Source link IMF: economy has emerged from crisis well, more effort required for schools, housing, climate