ABN Amro: Netherlands can expect recession, but turnaround will lead to 2023 growth

The high inflation and rising interest rates are putting pressure on the Dutch economy, which will therefore wind up sliding into a recession. However, the downturn will not last long, economists from ABN Amro predicted.

Over the whole of next year, they expect the economy to grow by half a percent. Annual inflation will weaken sharply next year to 3.7 percent, the economists predicted. This is because energy prices will not continue to rise, partly due to the government's price ceiling, they speculated.

However, the high prices for energy, materials and wages will be reflected in the prices of more and more products and services. This will make it more difficult to bring inflation back down even faster.

Because wages will also continue to rise and the government is limiting energy costs, consumers will likely start spending more starting in the second quarter next year. Despite that, experts at ABN Amro still think that consumer spending will be slightly lower for the whole of next year.

The European Central Bank raised interest rates this week by 0.5 percent to 2.5 percent to continue their strategy to combat inflation. Earlier this week, ABN Amro said it expects interest rates to peak at about 2.5 percent.