Netherlands Plunges Into Recession as Q2 2023 Sees 0.3% Contraction

Amsterdam: Statistics Netherlands’ initial estimate reveals that the Dutch economy contracted by 0.3% in the second quarter, marking the second consecutive quarterly shrinkage.

This follows a 0.4% decline in Q1. The Netherlands, the euro zone’s fifth-largest economy, had witnessed robust growth at nearly 5% annually in 2021 and 2022, bouncing back swiftly from the pandemic-induced downturn.

The recession is attributed to declining consumer spending and reduced exports, aggravated by elevated inflation. Escalating inflationary pressures drove up both food prices and energy costs not only within the Netherlands but also among its trading partners. Notably, consumer spending recorded a 1.6% drop, while exports dipped by 0.7% compared to the first quarter.

Inflation, which had peaked at 14.5% in September of the previous year, has somewhat receded but remained relatively high at approximately 6% throughout Q2 2023. The economic setback underscores the ongoing challenges posed by inflation and its impact on consumer behaviour and international trade.