Economists think the Dutch economy will avoid a recession

The Dutch economy will most likely avoid a recession. Economists generally agree that Statistics Netherlands (CBS) will report moderate growth over the second quarter of the year on Wednesday. The size of the economy unexpectedly declined in the first three months of the year.

Economists usually call it a technical recession when there are two consecutive quarters of contraction. In the first quarter, a contraction of 0.5 percent was recorded. But this time, experts consulted by the financial news agency Bloomberg are counting on an average increase of 0.2 percent compared to the previous period.

Hugo Erken, head of the Dutch economy at RaboResearch, is even more optimistic. He predicts a growth of 0.4 percent. According to him, the Netherlands' exports, in particular, played a role in the first quarter. Two incidental matters played a role in this, he stated.

"Chip machine manufacturer ASML had a weaker start to the year after a strong closing quarter in 2023. In addition, the Limburg car factory VDL Nedcar saw their contract with BMW expire, which meant that vehicle production came to an end there. Those two cases will not be in play this time," Erken explained.

ABN Amro economist Aggie van Huisseling is expecting 0.2 percent growth. However, she emphasized that the Dutch economy is in a good place. This is mainly due to improved consumer purchasing power, as inflation is lower and wages have risen sharply.

"It is also because the unemployment rate is so low," said Van Huisseling. "If you lose your job, you can find new work quickly." Van Huisseling added that it would take a while for exports to increase again, considering that the industry sector is still showing weakness and that an important trade partner in Germany is struggling economically.

Erken also mentioned the industry. "Inflation has hit hard. Not only individuals but also companies are affected by it," he says. "There is also a lot of uncertainty, for example, because of the war in Ukraine and the Middle East. And will it be Harris, or will it be Trump? That makes quite a difference."

In addition, it is becoming clear that labor productivity is under pressure. "We need to look into this. It seems like we are working less efficiently," said Erken.

According to him, the new Cabinet must work on the business climate to prevent the competitiveness of Dutch businesses from being at stake.