Roundup: Dutch economy could keep growing, integration of immigrants crucial: OECD

The Dutch economy will continue to improve in 2016 and 2017 but a failure to adequately integrate migrants and a lack of competition in the lending market for small business could hurt growth, the Organisation for Economic Cooperation and Development (OECD) said on Thursday.

"The Dutch economy is performing very well and is able to create jobs, even at moderate growth levels," said Stefan Kapferer, deputy Secretary General of the Paris-based organisation when presenting its regular bi-annual survey in the Hague.

MODERATE BUT PERSISTENT GROWTH

The OECD forecast a 1.7 percent growth this year and 2.1 percent in 2017 for the Dutch economy. "The Dutch economy is growing moderately but persistently. We are in good shape for the future," said Dutch minister of economic affairs Henk Kamp, who was present at the OECD presentation.

The budget deficit would keep declining, reaching 1.9 percent of GDP in 2016 and 1.5 percent the next year, showing a better fiscal sustainability, said the OECD expert.

The OECD expert called for the Dutch government to pursue reforms to unlock investment and in particular in the housing market, which has suffered a decrease in the recent years, but is expected to pick up due to a 10 percent rise in the number of households in the next years.

With 90 percent of small business loans coming from just three banks and being relatively expensive, OECD warned of a lack of competition in the financial market. "In 2015 one of four lending requests by small and medium sized companies was rejected by the banks in the Netherlands. This was the highest level among all OECD countries," the OECD expert said.

New lenders should be encouraged to enter the market, while entrepreneurs should have more access to financial education in order to look into alternative financing, such as equity finance or crowd funding, the OECD recommended.

The OECD expert called on the Dutch government to look into the steep rise of self-employed, a trend expected to put pressure on the social system in the long term. "Currently at 17 percent of the employed population, the self-employed in the Netherlands represent the highest level among OECD countries," he said.

Self employment might lead to more mobility, more flexibility and more entrepreneurial spirit, which can be a positive force for the economy, but it would have an impact on the Dutch social security, the pension system and the disability insurance in the long term, warned Kapferer.

The OECD also warned for the need of more investment on research and development as the Netherlands does not reach its national target of 2.5 percent of GDP or the EU target of 3 percent of GDP.

"It will become more relevant for the future to be more competitive," said Kapferer. He called for more direct funding on research and development. A recommendation well received by the Dutch minister of economic affairs , who also mentioned the need to enhance private investment in research and development.

INTEGRATION OF IMMIGRANTS CRUCIAL

For the OECD, a failure to adequately integrate immigrants could hurt growth. Employment rate among foreign born population was 15 percent lower than the employment rate for the native-born Dutch, representing the largest such gap in the OECD. The organisation's expert called the Dutch government to take steps to bridge the gap by opening more education opportunities for immigrants.

According to the OECD, the inflow of refugees will cost the Dutch economy around 1 billion euros(1.09 billion U.S. dollars). "The Netherlands will spend 0.15 percent of GDP for the migration crisis," said Kapferer. It is lower than other countries with large inflows, such as Austria (0.3 percent of GDP), Germany (0.5 percent of GCP) and Sweden (0.9 percent of GDP).

"The arrival of more immigrants is not a financial question. It is a stretch for the budget, but the main challenge is to integrate these people in the education and the labour market," Kapferer told Xinhua.

The impact on GDP per capita will depend on the success of labour market integration and the skills of refugees, according to the OECD survey.

Refugees would cost the Netherlands 1.5 billion euros in 2016, the Dutch Finance minister Jeroen Dijsselbloem told media on Wednesday. Last year when some 50,000 to 60,000 refugees arrived, the Dutch government had to raise its budget for the reception of asylum seekers twice up to 1.1 billion euros.

For 2016, the Dutch government based its calculations on a number of 58,000 incoming refugees, taking into account government and EU measures to reduce the number of refugees. However, Dutch media reported earlier that the Central Agency for the Reception of Asylum Seekers (COA), the Ministry of Safety and Justice, and local councils are making plans based on a number of around 93,000 incoming asylum seekers this year.

In 2014, nearly 24,000 requests for asylum were submitted in the Netherlands, an increase by 66 percent relative to 2013 and the highest number since 2002, according to Statistics Netherlands (CBS). Enditem