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Remarkably robust economy: predicted downturn limited to manufacturing and building sectors.

The Netherlands can prepare for a good economic year and most regions in our country will benefit from this, Rabobank expects.

At the end of last year, Rabobank predicted a cautious growth of 0.6 percent, but the bank’s economists have since become a lot more optimistic. The economy will grow by 2 percent this year, is the latest message. The main explanation for this growth: consumers continue to spend money.

Thanks in part to the government, which is taking measures to maintain purchasing power. For example, regional economist Floris Jan Sander of Rabobank points to the increased minimum wages, benefits, pensions and allowances. And meanwhile, collective bargaining wages continue to rise. “They give a pendulum to household consumption,” Sander explains.

In addition, the economy is growing due to growing international trade. The demand for Dutch goods and services was already on the rise last year and that is expected to continue this year.

Big plus

Although the economic outlook is favourable, not all sectors will end in a big plus. There are sectors that are going fast, but there are also sectors that are lagging behind. The ICT sector and business services, for example, are expected to grow the fastest this year, at 3.8 and 3.5 percent respectively.

Far-reaching digitization and investments in IT infrastructure such as cloud networks play a role in ICT. Business services, such as consultancy services, accountancy and the legal profession, have to deal with laws and regulations, which means that the demand for services remains high.

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Staff cuts

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It seems that other business services – a sector that includes employment agencies, security, cleaning services and travel agencies – has little to complain about this year. The temporary employment agencies and secondment agencies offer flex workers and can thus help other companies that are struggling with staff shortages. The travel sector is also performing above average.

But there are also sectors that are getting off badly. Rabobank predicts a contraction of 0.4 and 0.3 percent respectively for the industry and construction sectors. For industry, the bank expects that the energy-intensive sectors will have a hard time, despite falling energy prices. They also have a hard time competing with other countries. The forecasts for construction are also less rosy. “It is a combination of nitrogen/building exemption, continuing high construction costs, strict collective labor agreement requirements and slow procedures. The high interest rate also influences production,” says Sander.

The result: regional differences

These differences in sectors will affect the regions. Those where industry or construction plays a major role will lag behind. And the regions where, for example, ICT and business services are over-represented, will lead the way. What is clear is that virtually all regions can expect growth this year.

In this way, the regions with a concentration of (knowledge) services can indulge themselves. For example, the ICT sector is relatively large in Utrecht, Greater Amsterdam and Gooi- en Vechtstreek. These regions therefore also benefit from strong growth in this sector. And business services are large in Greater Amsterdam, Flevoland and The Hague. “That is why the growth figure for these regions is also higher than nationally,” Sander explains.

There is less good news for industrial regions. The growth figures for IJmond, Zeeuws-Vlaanderen, the Achterhoek and Delfzijl and the surrounding area are lower. Also because the economists predict a contraction for the industry. An exception is Brainport Eindhoven. It continues to benefit from the favorable business climate and its focus on high-tech.

Delft and Westland, Southeast Friesland and the Veluwe also have a favorable business climate and benefit from it. All in all, the Netherlands is in good shape, says Rabobank. Nevertheless, economists do take into account high inflation. Sander: ,,The extra demand in the already overheated economy adds fuel to the fire and leads to more stubborn inflation. We are currently assuming 5 percent inflation this year, followed by 4.4 percent next year.”

“Compared to other European countries, the Dutch economy is in any case doing exceptionally well. Countries such as the United Kingdom, Spain, Italy and Germany, like the Netherlands, have been hit hard by the corona crisis, but the Netherlands has come through that period the best. We are resilient.”

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