That being said, the currency is still rock solid, and although worried and calling for another fiscal tightening this year, the Danish central bank will probably have to ease 5 to 10 bp soon in response to the ongoing strength in the currency parity vis a vis the euro. We can only expect very limited independent easing, in our view. The main drivers of growth this year will be consumer spending and domestic demand, in our view. In contrast to last year, both slower export growth and stock building are likely to weigh on overall growth in 1999, cutting about half a percentage point from the growth rate, on our estimates. Business surveys show a first glimmer of hope as output expectations seem to have stabilised, if not troughed.
Demand seems to have started to rebound, as exports orders start to rise again.
Meanwhile, domestic orders hold up quite well, despite the recent downtick. As a result, total order inflow appears to have troughed. Because of the sharp fall in demand last autumn, order book levels, by contrast, continue to decline, and have now reverted to their long-term average, a level last recorded in late 1996. Similarly, excessive inventories suggest that Dutch manufacturers still struggle with an unexpected shortfall in demand. Overall, the business survey data point to a brighter future for the sector, unless the dour economic situation in the rest of Europe has further negative effects on the Dutch economy.