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Economy and Finance

Economic forecast for Netherlands

The latest macroeconomic forecast for Netherlands. 

Following strong GDP growth in 2022, the Dutch economy cooled down in the first half of 2023, with real GDP decreasing by 0.4% q-o-q in the first quarter and 0.3% q-o-q in the second quarter. High inflation rates eroded households’ purchasing power, leading to a decrease in consumer spending. At the same time, a weakening external environment has resulted in a contraction of exports in the first half of 2023. Despite the decrease in economic activity, the labour market remains tight – unemployment is low in historical perspective and wage growth has picked up significantly. The increase in wage growth and a gradual decline in the inflation rate from high levels are expected to lead to a modest recovery in real wages and prevent a further drop in consumer spending in the second half of the year. Annual growth in 2023 is projected at 0.5%, a downward revision of 1.3 pps. from the Spring Forecast mainly due to the worse-than-expected outcome of GDP growth in the first half of the year.

GDP growth (%, yoy)4,30,51,0
Inflation (%, yoy)11,64,73,0

Growth is forecast to pick up slightly to 1.0% in 2024 on the back of a partial recovery in households’ purchasing power and an expected increase in demand from the Netherlands’ main trading partners. In addition, GDP growth is projected to be supported by government investments related to inter alia the green transition and defence.

Energy prices surged in 2022, driving up annual HICP inflation to 11.6%. Since the peak in the third quarter of 2022, energy prices started to come down and headline HICP inflation decreased to 6.3% y-o-y in the second quarter of 2023. The authorities put in place a price cap for gas and electricity in 2023 to protect consumers from any further price spikes. HICP inflation excluding energy and unprocessed food continued to increase in early 2023, reaching 8.8% in the first quarter and remaining at the same level in the second quarter. It is forecast to come down gradually in the second half of 2023 as the weakened domestic demand and lower energy prices relieve the pressure on price growth across the board. Headline inflation is forecast at 4.7% in 2023 and is expected to further slow down to 3.0% in 2024.