March 6, 2018 / 7:56 AM / 4 months ago

UPDATE 1-Strong economic growth in 2018, 2019 to drive up Dutch inflation

(Adds more detail)

AMSTERDAM, March 6 (Reuters) - Strong economic growth and rising wages in the Netherlands look set to drive up inflation to 2.3 percent next year, national forecasting agency CPB said on Tuesday.

The Dutch economy will continue to outperform its euro zone peers with growth of 3.2 percent this year, falling back slightly to 2.7 percent in 2019, the CPB said.

The euro zone’s fifth-largest economy reported growth of 3.2 percent last year, which was its strongest performance since 2007. With unemployment falling to the lowest level in 18 years, rising wages look set to push up inflation above 2 percent for the first time since 2013 next year, the CPB said.

That would put inflation in the Netherlands considerably above the average for the whole euro zone, as the European Central Bank (ECB) currently expects prices to rise by 1.5 percent in the currency block next year.

The low interest rates used by the ECB to get inflation towards its 2 percent target, continue to stimulate the Dutch economy as they fuel an ongoing boom on the housing market.

Growth is also helped by increases in government spending, while the export dependent country continues to profit from the economic recovery of its trading partners.

Reporting by Bart Meijer Editing by Raissa Kasolowsky

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