IMF's Concluding Statement of the 2018 Article IV Consultation on Netherlands visit
- 2. The risks to the outlook are tilted to the downside. Foreign demand could be dampened by growth uncertainties in major trading partners and intensification of the risks of fragmentation/security dislocation. Monetary policy normalization may add pressures to already leveraged firms and households and increase the risk of distress in major banks. On the upside, improvements in labor and housing markets would support consumption and investment, and growth could turn out to be stronger than expected.
- 3. Taking advantage of improved macroeconomic conditions and mitigating downside risks, policies adopted by the new Dutch government are appropriately aimed at reducing financial vulnerabilities in the private sector and unlocking potential growth. Under the envisaged expansionary fiscal policy, a strong focus on growth- enhancing measures would help bolster potential growth. Accelerating the phasing out of regulatory and tax distortions would help repair household and firm balance sheets. Tax and pension reforms, together with other structural reforms in housing and labor markets, would help reduce financial vulnerabilities, improve market efficiency, enhance productivity and potential growth, and help external rebalancing.