News Central Planning Bureau
Economy recovers faster after corona crisis
The economy is recovering faster than previously anticipated. According to the June estimate of the Central Planning Bureau (CPB), the GDP level in 2025 will be 1,5% lower than expected before the corona crisis, but that is more favorable than the negative effect of 3% that was previously assumed.
There is also a scenario where the economic recovery is even faster. "It may also be not that bad; a lot has been saved, especially by specific groups," said CPB director Pieter Hasekamp during a press conference about the estimate. Now the estimate is not based on additional consumption, but there could also be a period of catch-up growth, with the spending of hoarded savings and additional business investment. "Whether that is the case, we will see in the coming quarters, that would be very nice."
However, uncertainties can also make the economic picture worse. "The uncertainties are really smaller now than with previous estimates, but nevertheless it could be disappointing again if there is a new wave if variants emerge."
The government deficit is high this year, almost 6% of GDP and, according to the CPB, it will decrease to a 1,5% decrease in GDP in 2022 due to the expiry of support measures and the growth of tax revenues. As a result, the debt ratio will decrease next year, by 1,7 .56,3%-point to 2022% of GDP. The picture of 2025-2025 will partly depend on the coalition agreement that is concluded, Hasekamp indicates. A full recovery is foreseen for the labor market in XNUMX.
'Inflation due to higher commodity prices temporary'
Inflation will rise this year, mainly due to higher commodity prices. CPB expects inflation to be temporary and that inflation will level off again to 1,8% in 2022. "For the time being, we think there is a temporary upswing in inflation," says Hasekamp, who also indicates that there are uncertain factors. The June estimate states that it is 'difficult to draw conclusions about whether the current rise in inflation is temporary or not: in an international context, some point to the possibility of a new wage-price spiral'. Hasekamp says about raw material prices: "I saw that wood prices are already falling." According to him, the price increase is partly caused by supply problems. "Here too, the economy is adjusting and extra supply is coming."
Today we wrote that Analysts at ING expect that prices for sea transport will certainly not fall before 2023 and while capacity will increase, costs will not return to pre-coronavirus levels. When asked, Hasekamp responds to Foodbusiness: "Transport is a specific component that partly plays a role in the higher raw material prices. It partly also concerns materials themselves and the world market prices, such as oil. Higher transport costs no longer affect the inflation. At the moment we do not expect the increases to translate into permanent inflation. We expect the economy to adjust and see no reason for a wage-price spiral, but there is nothing to rule out."
Warning about too much government spending
The CPB director warns against 'too much exuberance' in politics in The Hague. "There is no need for demand stimulation and no need for further cutbacks in public finances, but on the other hand you also have to watch out for a structural burden on the EMU balance." He sees that in The Hague 'the term investing, just like recovery policy, is stuck on everything'. Hasekamp: "There are reasons not to count yourself too rich."
Linda van Eekeres
© DCA Market Intelligence. This market information is subject to copyright. It is not permitted to reproduce, distribute, disseminate or make the content available to third parties for compensation, in any form, without the express written permission of DCA Market Intelligence.
