IMF: Inflation will remain very high next year, stalling Dutch economic growth
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Loading... - Aiden Connolly
- 14 Oct 2022
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Inflation in the Netherlands is likely to remain at a very high level next year, and economic growth will likely grind to a halt, the International Monetary Fund (IMF) predicted. The organization said on Tuesday that it believes that the current energy crisis in Europe is not temporary, but permanent.
The fund's new estimates assume 12 percent inflation for the whole of this year. Next year, inflation could reach 8 percent, the IMF believes. That will then have a significant impact on the economy. For this year, the fund is still anticipating 4.5 percent growth in the Netherlands, but next year the economy is only expected to grow by 0.8 percent.
IMF chief economist Pierre-Olivier Gourinchas said the Russian invasion of Ukraine has triggered a "geopolitical realignment of energy supply" that is "broad and permanent." It will be "challenging" this winter to prevent Europeans from suffering in the cold, he said. Next year's winter will only be more difficult, he estimated. He also pointed out that the war in Ukraine is still ongoing 33 weeks after Russia intensified its invasion, and that the current problems related energy supply could simply get worse.
With its forecasts, the IMF presented a much gloomier outlook compared to many other economists. In the latest estimates from the Dutch government's Central Planning Bureau (CPB), the economy of the Netherlands could see possible growth next year of 1.5 percent. Because of proposals to boost purchasing power, the CPB assumed that inflation would fall below 3 percent next year, in estimates presented around Budget Day last month. Read More...
