Abstract
The staff report for the Netherlands’ 2009 Article IV Consultation describes the economic developments and policies. State interventions in the financial sector have been broadly appropriate and consistent with a sound fix-it-and-exit approach. Measures have included capital injections, nationalization, and government guarantees. Although systemic risks have been addressed effectively and risk-weighted capital ratios are above required minima, building up equity to levels deemed more adequate in regulatory reform proposals and brisker lending to support the economic recovery may require banks to tap considerable extra capital.
January 11, 2010
1. This statement summarizes developments in the Netherlands since the issuance of the staff report. The additional information does not change the thrust of the staff appraisal.
2. Staff has raised the projections for GDP growth in 2009–11. This is the result of continuing improvements in the outlook for the major advanced countries and revised estimates indicating slightly stronger growth in Q3 2009.
The latest data indicate that quarterly GDP growth in Q3 2009 was 0.5 percent, slightly higher than the earlier estimate of 0.4 percent, reflecting slightly higher expansion of exports, personal consumption and government spending. On this basis, we have revised our 2009 GDP growth projection to -4.0 percent from -4.2 percent.
GDP growth for both 2010 and 2011 is now projected at 1.3 percent (compared to earlier projections of 0.7 percent and 0.6 percent respectively), owing mainly to a more sanguine outlook for the larger European economies.
At the same time, the unemployment rate forecast for 2010 has been lowered from 6½ percent to 5 percent (Eurostat definition).
3. The authorities’ main think-tank—the CPB—has also revised its 2009–10 GDP growth projections upward. 2009 GDP growth is expected at -4.0 percent (-4¾ percent earlier), while 2010 growth is projected at 1.5 percent (zero percent earlier). The central bank, however, is less optimistic, and for 2009, 2010, and 2011 it is projecting growth of -4 percent, 0.7 percent, and 1.2 percent, respectively.
4. Consumer price inflation is rising from recent lows, house price deflation is moderating, and unemployment was stable in October. Harmonized inflation rose to 0.7 percent (12-month change) in November from a recent low of -0.1 percent in July. It is now above the 0.5 percent euro area rate for November. House prices dropped 4.7 percent in November 2009 (12-month change), down from a 5.2 percent decline in October. The unemployment rate (Eurostat definition) was 3.7 percent in October, unchanged from September and well below the euro area average of 9.8 percent.
5. Financial institutions have repaid significant amounts of state support. ING paid back €5 billion out of the total assistance of €10 billion, SNS returned €185 million out of €750 million, and Aegon repaid €1 billion out of €3 billion.