A little bit of good news: figures published by Statistics Netherlands (CBS) on Tuesday morning reveal that, in spite of the record inflation rate, the Netherlands has managed to avoid a recession after the Dutch economy grew by 0,6 percent in the final quarter of 2022.
Between the coronavirus pandemic, Russia’s invasion of Ukraine, and the energy crisis, it’s unsurprising that many feared the Netherlands was headed for a recession. However, preliminary figures from CBS reveal that, so far, the country has managed to successfully avoid an economic downturn.
While the third quarter of last year saw the Dutch economy contract by 0,2 percent, the final three months of 2022 brought a much-needed boost as Gross Domestic Product (GDP) rose by 0,6 percent. In order to be classified as a recession, the Netherlands would’ve had to record at least two consecutive quarters of declining GDP.
Instead, provisional figures from CBS report that the Dutch economy grew by a total of 4,5 percent in 2022 - the second-highest figure recorded so far this century. In 2020, the economy contracted by 3,9 percent, while in 2021 it grew by 4,9 percent.
According to CBS, the growth seen at the end of last year can largely be attributed to an increase in household consumption (+0,9 percent compared to the third quarter). In spite of the rising prices, when adjusted for inflation, households and families spent more money on a number of services, including cultural and recreational activities, catering, and transportation and communication.
Spending by the Dutch government also increased by 0,4 percent, while investment in fixed assets increased by 0,5 percent. More money was invested in housing and infrastructure in particular. Finally, exports from the Netherlands increased by 2,4 percent compared to the third quarter, while imports increased by just 2,2 percent, meaning Dutch trade “made a positive contribution to growth in the fourth quarter.”
Peter Hein van Mulligen, chief economist at CBS, has said he was pleasantly surprised by the preliminary figures: "I hadn't factored in a big contraction, I thought there might be a small plus, but the 0,6 percent growth is even better than that,” he told RTL Nieuws. "Apparently consumers had more money to spend. It seems that the good labour market played a role in this."
Interestingly, in spite of the fact that the Netherlands recorded one of the highest inflation rates in Europe, the economic growth seen at the end of 2022 was an average of 0,6 percent higher than the figures reported in neighbouring countries.
Both France and Belgium reported economic growth of just 0,1 percent in the fourth quarter, while in Germany - the largest economy in the EU - the economy contracted by 0,2 percent. On average, economic growth across the bloc was 0 percent.
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