Dutch economy recorded strong growth in second quarter despite inflation

The Dutch economy grew by 2.6 percent in the second quarter compared to the three previous months. That is a much larger increase than in the first quarter of 2022 when the war in Ukraine and the gas crisis still caused a lot of uncertainty. Netherlands residents spent more on cafe visits, trips, and travel after most coronavirus restrictions disappeared. Companies invested more, and the Netherlands exported more than it imported, reported Statistics Netherlands (CBS).

The stats offices noted that coronavirus restrictions still applied at the beginning of 2022, including for contact professions. Partly because of this, economic growth in the first three months of the year was limited to 0.5 percent compared to the previous quarter.

Compared to a year earlier, the Netherlands’ gross domestic product (GDP) rose by 5.3 percent. Strikingly, consumers mainly spent more on services. They bought less typical lockdown purchases such as furniture or other things to furnish the house. They also consumed less gas, which has become extremely expensive, partly due to the Russian invasion of Ukraine. CBS attributed the decrease to the mild winter.

In June, consumers spent 5 percent more than a year earlier. They mainly spent more on services like phone and internet subscriptions, insurance, and visits to the hairdresser, restaurant, or football match. The growth of these services amounted to 14 percent.

Consumers spent 4.5 percent less on food, beverages, and tobacco in June than in the same month last year. They spent almost 2 percent less on other goods, like natural gas, car fuels, and personal care products than a year earlier. According to CBS, they also used less energy than a year ago.

Companies invested more in buildings, aircraft, and ships in the second quarter. They also spent more money on software and machines. For exports, which grew by 5.6 percent annually, it was especially beneficial that foreigners spent more on transport or visits to the catering industry in the Netherlands. This counts as exports in CBS’s calculations. Because imports increased less, our country had a larger trade surplus, contributing to economic growth.

The growth figures for the period from April to June are striking because many bad omens loomed over the forecasts for the economy in Europe and the United States. For example, consumers are very gloomy because of the high price increases. The British central bank warned of a severe recession in the United Kingdom. De Nederlandsche Bank said in June that economic growth could come to a standstill. If the supply of Russian gas stops abruptly, the Dutch economy could contract, the central bank said.