Two years after being out of the best-rated league countries in the euro area, The Netherlands is back after S&P’s re-awarded AAA rating.
It is said to having deserved to be in the same league as Germany, Luxemburg, UK, Norway, Switzerland, Sweden and Denmark because of its recovery and faster growth prediction than expected. Its ranking was lowered in November 2013 due to the lower growth prospects than previously anticipated, and the lower real GDP per capita trend growth rate than that of peers at similarly high levels of economic development. But now, S&P pointed to stronger predictions than expected. It noted the Dutch “long track record of prudent and flexible macroeconomic policies reflected mainly in its improving budgetary position” as its reasons for raising the rating.
The AAA rating reflects the wealthy and flexible economy, large and continual current account surpluses and the strengthening recovery reducing balance sheet and financial risks.The key drivers of the economic recovery are increase in private investment and the increased household consumption thanks to low inflation and decrease in oil prices. This demand driven recovery and improved condition in house and labor markets have led to the many benefits of the banking sector. It’s set to grow 2 percent this year and 2.4 percent in 2016, according to a September prediction from the Dutch central planning agency.
Despite the risk of the deflation, which is present in Eurozone, the ECB’s asset purchase program should ground inflation anticipation and avoid prolonged deflation. A steady improvement in Eurozone economy is expected to help Dutch export since it is mainly conducted in the UK, France, Germany and Belgium and affirm its triple A status.
Angela Djukic
It is said to having deserved to be in the same league as Germany, Luxemburg, UK, Norway, Switzerland, Sweden and Denmark because of its recovery and faster growth prediction than expected. Its ranking was lowered in November 2013 due to the lower growth prospects than previously anticipated, and the lower real GDP per capita trend growth rate than that of peers at similarly high levels of economic development. But now, S&P pointed to stronger predictions than expected. It noted the Dutch “long track record of prudent and flexible macroeconomic policies reflected mainly in its improving budgetary position” as its reasons for raising the rating.
The AAA rating reflects the wealthy and flexible economy, large and continual current account surpluses and the strengthening recovery reducing balance sheet and financial risks.The key drivers of the economic recovery are increase in private investment and the increased household consumption thanks to low inflation and decrease in oil prices. This demand driven recovery and improved condition in house and labor markets have led to the many benefits of the banking sector. It’s set to grow 2 percent this year and 2.4 percent in 2016, according to a September prediction from the Dutch central planning agency.
Despite the risk of the deflation, which is present in Eurozone, the ECB’s asset purchase program should ground inflation anticipation and avoid prolonged deflation. A steady improvement in Eurozone economy is expected to help Dutch export since it is mainly conducted in the UK, France, Germany and Belgium and affirm its triple A status.
Angela Djukic