Kingdom of the Netherlands–The Netherlands: 2024 Article IV Consultation-Press Release; and Staff Report

International Monetary Fund

No 2024/085, IMF Staff Country Reports from International Monetary Fund

Abstract: The 2024 Article IV Consultation discusses that the economy has cooled, but signs of overheating remain in The Netherlands. After two years of strong recovery, growth decelerated in 2023, reflecting the energy shock, tighter financial conditions, and a slowdown in key trading partners, particularly Germany. Core inflation remains elevated, reflecting a tight labor market, robust wage growth, and healthy profit margins. Growth is expected to gradually regain momentum in 2024, driven by higher private consumption and external demand. High interest rates will weigh on business and residential investment. For 2024, given the high cost of underestimating inflation persistence, a non-expansionary stance is warranted; adjustment measures should be identified. Medium-term fiscal challenges call for structural reforms to stabilize debt. Climate mitigation strategies need to tackle implicit fuel subsidies, striking the right balance among regulation, pricing/feebates, and subsidies, while addressing distributional concerns and ensuring policy predictability.

Keywords: government Finance statistics yearbook; IMF staff calculation; core inflation persistence; EMU aggregate; consultation cycle; Labor markets; Inflation; Labor shortages; Fiscal stance; Europe (search for similar items in EconPapers)
Pages: 78
Date: 2024-04-08
New Economics Papers: this item is included in nep-inv
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