This in turn will affect exports, just when this sector is of vital importance as engine of the Dutch economy, domestic dynamics in the Netherlands and the rest of the euro area being less than optimal. The credit side of the balance sheet shows that we have grown richer on account of the appreciation of our currency.
With imports becoming cheaper, the appreciation of the euro – while on balance hampering economic growth, especially in the shorter term – is favourable for inflation. According to DNB simulations, in the next three years the euro’s appreciation in 2003 and 2004 will reduce production growth in the euro area by about 0.3 percentage point per year on average.