Many companies facing a make-or-break year:
- Growth on the back of exports, investments and domestic spending
- Economy boosted by low oil prices, inflation and euro exchange rate
- Overcapacity and structural trends are changing the dynamics
Growth of Dutch economy broadly based
ABN AMRO is expecting the Dutch economy to grow by 1.5 per cent in 2015. About half of this growth will be generated by export. For one thing, the export of the Netherlands stands to benefit from the strongly performing economies of the US and the UK. Furthermore, economic growth will be accelerated by improved private consumption, corporate investments and investments in homes as confidence returns and the housing market picks up. ABN AMRO concludes that these factors signal broadly based growth in the Netherlands.
Purchasing power enhanced by low inflation
Additionally, economic growth is reinforced by the current low oil prices and the weak euro, which improves competitiveness of eurozone businesses. If the euro depreciates even further, ABN AMRO expects that to result in even stronger export growth. The euro’s decline is possibly being fuelled by the ECB's monetary easing measures. ABN AMRO also anticipates that low inflation will increase the purchasing power of consumers. Meanwhile, low interest rates reduce financing expenses for both businesses and individuals.
Amid broadly based growth, structural problems remain a challenge
Every sector will enjoy growth in 2015, ranging from 0.5 up to 3 per cent. Meanwhile, the differences in performance between sectors will be much smaller than they were in previous years. 2016, ABN AMRO believes, will be slightly better even than the upcoming year. Private consumption in particular should accelerate, while investments and exports should continue their upward trends. In this scenario, ABN AMRO is expecting higher growth rates for most sectors in 2016. Despite this favourable outlook, the bank emphasises that 2015 will still be a make-or-break year for many companies who have seen their reserves dwindle in recent years, leaving them vulnerable even against a backdrop of mild sector growth. This is particularly the case in sectors suffering from surplus capacity, such as automotive retail and retail in general, as well as certain segments in transport & logistics and in agriculture. Companies facing such structural changes are challenged to respond with new business models.