The Dutch economy will grow by 0.8% in 2023, house prices will fall by 3% and inflation will ease to 4.9%, according to DNB projections.
After a brief dip in late 2022, the economy is set to rebound, albeit slowly, in 2023, partly thanks to the government's price cap to cushion the blow of skyrocketing energy prices. DNB expects economic growth of 0.8% in 2023 and 1.6% in 2024, according to the latest projections from December 2022.
For years, house prices have been rising robustly. That came to an end in 2022. DNB expects house prices to fall by a combined 6% over the next two years. Mortgage interest rates have also risen more than expected, making it harder for homebuyers to finance a property.
After a record high of 11.5% in 2022, inflation will fall sharply in the coming years. This is mainly due to the stabilisation of energy prices and the government's price cap. DNB expects an inflation rate of 4.9% in 2023 and 5.0% in 2024.
Every six months, we present our expectations for the Dutch economy in the our Economic Developments and Outlook. In doing so, we not only deal with economic growth and underlying expenditure categories, such as consumption, investment and exports. We also discuss developments in such areas as inflation, the labour market, the housing market and public finances.
Following a historical contraction in gross domestic product (GDP) of 3.7% in 2020, the Dutch economy is expected to recover strongly and rapidly, starting in the second quarter of 2021. GDP is expected to have grown by 3.0% in 2021, 3.7% in 2022 and 1.9% in 2023, on the assumption that the social distancing measures will gradually be relaxed further, and that they will no longer be necessary by 2022. Based on our projections, by the end of 2021 GDP will be higher than just before the pandemic, and the economy will recover much faster than after the 2008 financial crisis.
If support measures are scaled back after the third quarter of 2021, employment will initially decline slightly, only to pick up significantly over the course of 2022. At the same time, the improved economic outlook will prompt many more people to look for work. Unemployment is expected to rise as a result, from 3.6% in 2021 to 4.5% in 2022. As the economy recovers further, unemployment should fall back to 4.1% in 2023. Inflation is projected to go up from 1.1% in 2020 to 1.5 % in 2021, due to higher oil prices. Inflation should remain at 1.5% in 2022 and rise to 1.8% in 2023, in line with increasing labour market tightness.
The DNB business cycle indicator allows us to detect turnarounds in trends for the Dutch economy in good time. We use it to look up to six months ahead. The aspects we study are consumer confidence in economic conditions, business activity we expect in Germany, new manufacturing orders, manufacturing materials procurement and interest rates.
We prepare our projections for the Dutch economy using a macroeconomic model named DELFI. We also use it to assess the consequences for the Dutch economy of changes in economic policy or economic conditions. The DELFI tool allows you get your hands on the controls of the Dutch economy. For example, you can see the effects of lower or higher oil prices, more or less world trade, or higher or lower wages.
In addition to the Economic Developments and Outlook and our business indicator, we also regularly publish studies, news releases and speeches on current economic topics. You can find this under ‘Interesting articles’ on this page, under ‘Publications’ or by using the search bar.
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