658 - The Netherlands' economy in 2001-2003: a forecast based on MORKMON

Wetenschappelijke publicatie
Date 1 July 2001

This report presents a forecast and a variant analysis of the Netherlands’ economy for the period 2001-2003 using MORKMON, the macroeconomic model of the Nederlandsche Bank. The economic growth forecasts are less exuberant than the gdp-growth of 4% we have witnessed in the last four consecutive years. Economic growth is projected to come down to 2.5% this year. Inflation however accelerates to 4.5% this year, partly because of temporary factors. Next year and in 2003 the inflation rate is expected to come down to 3.1% and 2.2% respectively. High actual inflation numbers (4,9% in May), though, entail the risk of starting a price-wage spiral. Hence, inflation might come out markedly higher and the possibility of a hard landing of the Dutch economy due to a further loss of international competitiveness cannot be ruled out. Key words: macroeconomic forecasts, MORKMON, price-wage spiral, labour supply