The economic recovery that started in 2010 will slow down to some extent in 2011 said Piet Moerland, Chairman of Rabobank's Executive Board, presenting the economic Outlook 2011.
The Dutch economy is expected to grow by 13/4 per cent in 2010. This is set to shift down to an average 11/2 per cent in 2011 and the following years. There are several reasons why economic growth is slowing down. First, the global recovery is losing momentum. This has an immediate impact on the Netherlands in light of its open economy. In addition, the Dutch government is set to cut spending substantially in the years ahead, and uncertainties affecting consumer confidence and consequently also consumer spending will persist in 2011.
Dangerous global economic imbalances In terms of the global economy there is a deeper underlying problem, however. Rabobank's Outlook 2011 shows that major global and European imbalances are continuing after more than three years of financial crisis. The U.S. current account deficit remains huge and is once again widening, while China is artificially keeping the yuan exchange rate low. The main central banks are in the meantime maintaining extremely low key interest rates. Cranking up the money printing presses is also no longer expected to produce meaningful effects. Ultimately, each country is responsible for solving these economic imbalances, Rabobank's economists maintain.
Essentially, countries with savings deficits should reduce them and, conversely, countries with savings surpluses should up consumer spending. This global rebalancing could cause both unemployment and government debt in the developed economies to fall to acceptable levels, while at the same time reducing the risk of deflation. What's more, countries with an initial savings surplus will benefit from more sustainable growth that is also less sensitive to external shocks. Doing nothing and hoping for a return to the old familiar paths of growth is unrealistic. As far as that goes, the credit crisis has made it painfully clear where the global and European bottlenecks are located. Forceful measures need to be introduced to divert this from once again turning into a crisis. This necessity has once again been underscored by the recent flare-up of the European debt crisis, the Rabobank economists comment. They characterise the sluggish continuation of the past year's fledgling recovery as extremely disappointing.
In 2010, the economy clambered out of a deep recession, the deepest since the 1930s. But as 2010 draws to a close, the recovery is far from robust and the prospect of global prosperity is still very remote. Closer to home, the question is whether any improvement is in the offing for the Netherlands in the medium term. Average growth is expected to be lower in the years ahead than might be possible and much more moderate than the country was accustomed to in the years before the crisis. This is not likely to change much in the years ahead. The working population is contracting as a result of the ageing of the population, leading to tightness in the labour market in the future and curtailing potential growth. IN2030: Four scenarios for businesses The theme publication IN2030: Four scenarios for businesses was published at the same time as the macro-economic Outlook 2011.
The Rabobank economists based this scenario study on two key variables: conflict versus harmony and evolution versus revolution. The combination of these two variables has led to four scenarios, each of which depicts a possible world in 2030. The issues addressed include the following: What will the major power blocs be in twenty years' time? Will the European Union still exist? Will the euro be a global currency or just a faint memory? Will there be peaceful coexistence or a new Cold War? Will food supplies be adequate to feed the growing global population? Will there be sufficient alternatives for the finite supply of fossil fuels? And what about the structure of the Dutch economy? Will the services sector continue to surge in the Netherlands at the expense of other industries? This theme publication provides a taste of the book IN2030: Four visions of 2030, which is due to be published in 2011.
Source: www.allbusiness.com
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