The Dutch economy has officially slipped into a recession as it recorded consecutive declines in quarterly gross domestic product indicators. According to data from Statistics Netherlands (CBS), the GDP volume experienced a decrease of 0.4 percent in the initial quarter of this year, followed by a further dip of 0.3 percent in the subsequent quarter.
Comparatively, the contraction of the Dutch economy by 0.3 percent stands out in contrast to the economic progress witnessed in neighboring nations. CBS pointed out that during the second quarter of 2023, France and Belgium saw their economies expand by 0.5 percent and 0.2 percent, respectively, compared to the preceding quarter. Meanwhile, Germany’s GDP remained steady, paralleling the performance of the entire European Union.
However, when compared with the fourth quarter of 2019, before the onset of the coronavirus pandemic, the Dutch economy’s rebound appears more robust than that of neighboring countries and the EU average.
Dutch exports and household spending lowers
As the statistics office indicates, the decline can be primarily attributed to diminished exports and reduced household spending. In the second quarter of 2023, the export of goods and services decreased by 0.7 percent compared to the first quarter. Conversely, the import of goods and services rose 0.5 percent during the same period. Consequently, the trade balance emerged as the most significant contributor to the second quarter’s contraction, as CBS highlighted. Additionally, there was a notable decline of 1.6 percent in household consumption.
On the other hand, investments in fixed assets experienced a rise of 1.3 percent during the second quarter, primarily due to increased investments in transportation and machinery. However, there was a decline in residential investments. In terms of government consumption, there was a growth of 0.7 percent.
During the second quarter of 2023, more than half of the Dutch industries experienced a decrease in added value, which signifies the disparity between the production and consumption of energy, materials, and services compared to the preceding quarter. Among these, the most significant decline was observed in mineral extraction, whereas the trade, catering, transport, and storage sector had the most pronounced negative impact on the overall economic trajectory. Notably, energy companies witnessed the most notable increase in added value.
That marks the third instance in the last four quarters where the Dutch economy has faced a contraction. Although a 0.2 percent decline was recorded in the third quarter of 2022, the economy rebounded with a growth of 0.6 percent in the final quarter of the same year, attributed to heightened consumer spending. Despite these fluctuations, several economists initially believed that the Netherlands could avoid entering a recession, with experts from various banks reiterating this stance in recent times.
Dutch’s economy has had it tough
Following the emergence of the coronavirus outbreak, the Dutch economy experienced a substantial recession in the initial half of 2020. Notably, a remarkable quarterly contraction of 8.5 percent was registered between April and June, setting a new record. Before this, the most recent notable recession transpired in 2008, extending across six consecutive quarters. Additionally, there were instances of minor recessions in both 2011 and 2012.
Economic Affairs Minister Micky Adriaansens commented that the priority now lies in maintaining stability and predictability, whereby it’s crucial to proceed cautiously to avoid disrupting the economy and raising taxes.
