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REFILE--Dutch central bank trims forecasts as wary recovery continues
December 8, 2014 / 12:05 PM / in 3 years

REFILE--Dutch central bank trims forecasts as wary recovery continues

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AMSTERDAM, Dec 8 (Reuters) - The Dutch central bank trimmed its growth forecasts for the next two years in the half-yearly outlook it published on Monday, warning that slower global growth would hit demand in the export-oriented economy.

The 0.8 percent growth in economic output expected this year will be almost entirely fuelled by exports, but domestic spending will be increasingly important over the next two years.

By 2016, government and consumer spending and investments will contribute more to growth than exports for the first time since the credit crunch, the bank said.

“The Dutch economy seems slowly to be throwing off the yoke of the credit crisis,” the bank said in its report.

It said a plan by European Commission President Jean-Claude Juncker to boost investment across Europe may lift growth.

Last month, Dutch central bank governor Klaus Knot, long known as a deficit hawk, said countries with the fiscal space to do so should invest more in infrastructure.

The economy should be further helped by a recovery in the housing market, which is expected to regain a quarter of the value it has lost since the financial crisis by 2017.

The Dutch economy was forecast to grow 1.2 percent in 2015 and 1.5 percent in 2016, returning output to the level it had reached in 2008, when the financial crisis hit. Six months ago, the bank had forecast 1.6 percent growth in both years.

Growth could be stronger if the Juncker plan and other stimulus plans pay off, the bank said, reaching 1.5 percent next year and 2.2 percent in 2016.

The growth forecast for 2014 was raised from the 0.2 percent expected six months ago. A sharp contraction caused by lower gas sales in the first quarter turned out to be less severe than initially expected.

Inflation is expected to remain low, rising from 0.4 percent in 2014 to 1 percent in 2016.

House prices, which have fallen 20 percent since 2008, are expected to rise 2.1 percent next year and 3.2 percent in 2016.

The budget deficit will remain comfortably below the European Union’s ceiling of 3 percent of gross domestic product, falling from 2.4 percent in 2014 to 1.8 percent in 2016.

Despite the recovery, unemployment will remain high at 6.6 percent over the next two years. (Reporting By Thomas Escritt; Editing by Larry King)

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