Weaker trade to slow Dutch economic growth to 1.1% in 2021, central bank says

Economic growth in the Netherlands is set to subside to its slowest pace since 2013 in the next two years, as weakening international trade offsets strong domestic demand, the Dutch central bank said on Monday. Growth in the euro zone's fifth-largest economy is expected to drop to 1.4% next year and 1.1% in 2021, the central bank said, trimming its June forecast for an expansion of 1.5% and 1.4% respectively. Growth is expected to fall from 2.5% to 1.7% this year.

Unemployment is expected to remain at historically low levels, boosting wage growth and consumer spending, while making it harder for companies to attract new staff. Meanwhile, increasing trade tensions will weaken exports, the central bank said, as growth of international trade is expected to be cut in half to less than 2%.

A no-deal Brexit remains the largest threat to the Dutch economy, the bank said, cutting off half the economic growth now expected for the next two years. Inflation is expected to reach the desired level of around 2% by 2021, the central bank said, while government debt is expected to fall to the "comfortable level" of 45% of gross domestic product in the next two years.