Inflation in the Netherlands is expected to remain high until at least 2023, as labor shortages lead to higher wages during the economic recovery, the country’s central bank (DNB) said.
Inflation in the eurozone’s fifth-largest economy is expected to reach 3% in 2022 and 2.9% in 2023, following rising energy prices that pushed consumer prices to an estimated 2.7% this year.
“Inflation will be driven higher by higher wages into a labor market that remains tight,” the DNB said.
“But at the moment, we do not see unwanted levels of wage inflation,” the central bank said, as wages are expected to rise by an average of 2.5% over the next two years.
The Dutch economy has recovered stronger than most eurozone economies since the coronary recession, and the country’s central bank expects to grow 4.5% in 2021 and 3.6% in 2022, before falling to 1.7% in 2023.
The strong recovery is also visible in the labor market, where the number of job vacancies is higher than the number of unemployed for months, and the DNB expects unemployment to remain at historically low levels, at least until the end of 2023.
However, the outlook is likely to worsen if the pandemic continues to limit activity next year.
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Source From: Capital
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