Dutch domestic spending to increase further

Dutch private consumption increased by 0.2% q-o-q in the second quarter, compared to a growth of 0.6% in Q1. Throughout the year, consumption has been positively affected by the high number of home sales, which boosted consumer spending on durable goods. Consumer spending is expected to increase further in the remainder of 2015. Consumer confidence has improved considerably since the depths of the crisis and employment in the private sector is expected to expand further. 

Furthermore, the government plans to reduce taxes by EUR 5bn (0.7% of GDP) next year. The only factor that is expected to act as a drag on consumption growth is declining real wage growth, because of rising inflation. Inflation came out at 0.8% in July, 1.5%-point higher than January. This increase can mainly be attributed to a rise of core inflation excluding rent. Next year, the waning of the negative contribution of energy will push inflation up further.