Dutch economic boom set to wane as inflation bites – CPB

AMSTERDAM, Aug 19 (Reuters) – Economic growth in the Netherlands is set to slow considerably next year as ballooning energy bills and rising costs of living put a brake on consumer spending, government policy adviser CPB said on Friday.

Growth in the euro zone’s fifth-largest economy is set to drop to 1.1% in 2023 following an expected expansion of 4.6% this year, the CPB said.

Inflation in the Netherlands is set to spike at 9.9% in 2022, and will remain relatively high with 4.3% forecast for next year.

The policy adviser in March had guided for growth of 3.6% in 2022 and 1.7% in 2023.

The outlook for 2022 improved on the back of a very strong first half of the year, in which growth confounded all expectations as spending remained strong despite soaring inflation.

But that boom is set to end, the CPB said, as households begin to feel the pinch of rocketing energy and food prices, while companies struggle to find staff in a very tight labour market.

“We see an increase of people who struggle to make ends meet and for who it might become impossible to pay the energy bills”, CPB director Pieter Hasekamp said.

This will drive up poverty in the Netherlands, he said, as people with lower incomes will be hit hardest by the rising prices.

(Reporting by Bart Meijer; Editing by Lincoln Feast.)