ING global economic outlook 2023 December 2022 Our 3 calls for the Netherlands The Netherlands has probably seen inflation peak; growth next year will be driven by large increases in government spending Marcel Klok Senior Economist [email protected] Government spending will be the guiding light for growth in the Netherlands next year. Pictured: an art installation in Amsterdam 1 Government spending main driver of economic growth in 2023 While investment is expected to decline, household consumption is barely growing and exports are expanding less than usual, additional government expenditure will be the main driver of Dutch GDP growth in 2023. The ambitious coalition agreement should give an estimated net expenditure boost of 2.2% growth for next year. A weakening of the business cycle, therefore, coincides with a shift in activity to the public sector. On top of the many government plans comes a sizeable package of support measures to help people with the energy crisis. The energy price cap is potentially the largest piece of expenditure in this package. Its size remains highly uncertain given that we don't know where energy prices will sit. Recent government estimates are assuming somewhat lower energy prices than we're seeing now but the extra spending could still account for 1% of GDP. So government spending will be the driving force for GDP growth next year and other similar support packages throughout Europe will also help lift the Dutch economy. If you'd prefer to read our thoughts in Dutch, click here. 2 Unemployment increases are set to remain small The Dutch economy is forecast to grow by 0.4% in 2022 in our base case, after an expansion of 4.2% in 2021. We forecast negative growth for the last quarter of 2022 and the first of 2023, and moderate growth thereafter. This implies a short and shallow recession that does not translate into high unemployment. Despite the meagre growth outlook, we expect the unemployment rate to rise to just above 4% in 2023. We expect that a lot of firms will try to hang onto their personnel, given the short duration and mildness of the recession and the fact that all sectors recently faced a great deal of strain in the labour market.