News Rabobank
'Economy growing slightly this year, also agricultural sector'
Despite a contraction in the first quarter, the Dutch economy is expected to grow by 2023% in 0,6 and 2024% in 0,9, according to a Rabobank forecast. The outlook for the agricultural sector is also positive. Last year, the agricultural sector contracted by 0,6%, but this and next year's growth is forecast at 1,9% and 0,7% respectively.
The first quarter showed a contraction (the agricultural sector did grow, by the way). Rabobank did not see this coming. Chief economist Ester Barendregt of RaboResearch explains this in a press release: "This is partly because Statistics Netherlands has revised the quarterly figures for 2022, but mainly because the economy showed a surprising contraction in the first quarter of 2023, while we assumed a large plus. Lower exports and the reduction of stocks were the main reasons for the contraction in the first quarter."
Rabobank expects a slight growth of 0,6% for the full year. "Although the number of bankruptcies is considerably higher than last year, it is still low from a historical perspective. And although the purchasing power of households is under pressure due to high inflation, wages are now rising sharply, a record number of Dutch people have paid work and support government's incomes, so consumer demand remains stable," says Barendregt. The government also creates a bottom in the economy through consumption and investment, but Rabobank also takes into account that the government will not succeed in actually making all planned expenditures.
Business and housing investments are under pressure. Rabobank does not expect business investment to take a nosedive, but it estimates that investment in housing will fall sharply, especially next year. Fewer new homes are being built and fewer existing homes are being sold.
In many sectors, production decreased in the first quarter due to shortages of personnel and materials. The bank expects these challenges to be permanent. The industrial sector decreased by just over 1%. Construction grew 2,4%. The agricultural sector also grew in the first quarter, by 1%.
Debt burden risk due to increased interest rates
Due to the rise in interest rates, the debt burden of companies can pose a risk, says André Vermeulen, head of Sector Management HID & Healthcare in the message. "Quite apart from the repayment of corona debts, refinancing of debts also pose an increasing risk. After all, rising interest rates increase the interest burden and at the same time margins may decrease slightly due to inflation, among other things. The relationship between the repayment capacity and the debt burden deteriorates as a result."
Linda van Eekeres
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