We will not suffer forever; 2017 3% growth on the cards - Rabobank

Analysts at Rabobank explained that their outlook 2017 has focused mainly on economic developments.

Key Quotes:

"It should be obvious that our forecasts are surrounded by numerous economic and political uncertainties. These range from the conflict in the Middle East, a slowing of growth in China, increasing worldwide protectionism, Brexit and the associated threat of a break-up of the European Union (EU). Issues in the background include the European refugee problem, which appears to be somewhat less pressing than in 2015, but has certainly not been solved, and rising tensions in South-East Asia. We cannot deal with all these risks here, but it is important to remember that they could affect confidence at one time or another.

For now, we expect 2017 to be a year of very moderate economic growth of around 3%. The contours of the future direction will however gradually become visible during the course of the year. President Trump’s policy will become clearer, and there will also be a clearer view of whether the positive effects of a strong boost to spending will dominate the US economy or the negative effects of a more protectionist stance will gain the upper hand. If the US Congress succeeds in tempering the sharp edges of his protectionist plans, the positive effects of Trump’s policy on the economy could well dominate in the short term, although in the longer term we are concerned that the negative effects of his protectionist policy will be more significant.

A scenario in which the European economy continues to struggle along for years or even decades is not highly likely. The rise in anti-Europe sentiment demands effective answers. If nothing is done, there is a risk that the EU could be gradually undermined.

There are two choices. Either European cooperation comes to a halt and we fall back into economic nationalism or protectionism, which will lead to a recession in Europe, or we generate higher growth through a more effective cooperation, more economic reform and a more expansive budgetary policy. It will ultimately be policy choices that decide where Europe is going in the coming years. The situation is not one of an inevitable natural phenomenon. We could also be on the verge of a powerful growth recovery. The ball is now in the court of the politicians."