Pessimism over EU economy; Dutch GDP growth to hit 4.6% this year, 0.6% next year

The European Commission expects most EU countries to fall into a recession before the end of the year. The contraction will likely continue until the spring of 2023. Over the whole of next year, the executive board of the European Union is counting on average growth of no more than 0.3 percent. "The EU is at a turning point," the commission wrote in its annual autumn forecast. It expects the Netherlands to perform slightly better next year with a likely growth of 0.6 percent, and then 1.3 percent in 2024.

"The Dutch economy grew strongly in the first half of 2022 thanks to exports and investments. However, due to the Russian invasion of Ukraine, the economy is expected to contract in the second half of the year," the European Commission said in its report. "The real disposable income of households will fall."

The economic outlook in the EU has been shrouded in "exceptionally high uncertainty" as a result of the Russian invasion. The energy crisis is eroding away the purchasing power of households and is weighing on production. "The confidence of citizens and businesses in the economy has fallen sharply," said European Commissioner Paolo Gentiloni at the presentation of the figures in Brussels. The main threat is coming from "adverse gas market developments" and the danger of shortages, especially a year from now in the winter of 2023 - 2024. Gentiloni stressed that the EU economy is "resilient" and called for continued unity and solidarity within the Union.

Despite the war in Ukraine, economic growth in the EU this year is better than what the Commission forecast in July, averaging 3.2 percent in the eurozone and 3.3 percent across the EU. This is due to a strong start at the beginning of the year, when the coronavirus crisis seemed to have passed and citizens and companies started to return to normal life again.

Even with the slowing economy in the fourth quarter of the year, the Netherlands should end the year well above the European average. Brussels expects 4.6 percent growth in gross domestic product (GDP) in the Netherlands for all of 2022.

But inflation will also end higher in the Netherlands in 2022 than elsewhere in Europe. This year, inflation in the eurozone countries will average 8.5 percent, and 9.3 percent in the EU as a whole. However, that figure rises to 11.6 percent in the Netherlands. The Commission expects inflation to rise further towards the end of the year, before declining gradually in 2023 to 6.1 percent in the 19 eurozone countries, and 7 percent on average in all 27 EU Member States.

Next year, inflation in the Netherlands is expected to be back below this average at 4.2 percent. In 2024, it should fall further to 3.9 percent. Unemployment is expected to rise from 3.7 percent to 4.3 percent for both 2023 and 2024.

The committee also mentioned "the strongest labor market in decades" in Europe. More than 213 million people are in work in the EU, a record high. The unemployment rate across the Union is expected to be 6.2 percent this year and 6.5 percent next year.