Eurostat revised the European inflation figures this week. France and Italy have left the estimate roughly unchanged. But the figure in Germany has been significantly revised downwards. From 0.2 to 0.4 percent shrinkage,’ says BNR’s house economist Han de Jong. “I’d say that plus 0.1 goes to zero or to minus 0.1.”
Not only Germany, but also Ireland had to adjust the figure. And not just a little: from a growth of 3.5 percent to a growth of 0.3 percent. De Jong explains this sharp adjustment on the basis of the fact that the Irish economy differs greatly from the rest of Europe.
Ireland is home to many large companies, especially the European headquarters. ‘Then you have to think of Apple, Google, PayPal, but also the pharmaceutical sector and, for example, aircraft leasing. The sectors where these multinational companies dominate account for more than half of the total added value of the Irish economy.’
And that is difficult to measure, which is why GDP is not really a good measure of the Irish economy. ‘That means you have to take such a figure with a grain of salt. Of course, GDP remains an important benchmark. But there are also major drawbacks,’ says De Jong.
Based on the report from the Central Planning Bureau, De Jong concludes that the Dutch economy performed better than expected last year. ‘And also better than the neighboring countries.’ But will it stay that way? De Jong foresees a sharp drop in the inflation rate, ‘close to 4.5 percent inflation for the year as a whole’.
According to De Jong, purchasing power could be better than expected this year if inflation falls while wages accelerate.