In the first quarter, the Dutch economy shrank 0.3% less than the 0.7% expected. But the risk of a recession remains high. “The withdrawal remains bad news,” says BNR in-house economist Han de Jong.
De Jong points out that, although unemployment remains low, the economy has not grown for three consecutive quarters, while the population has. ‘I don’t think it’s a very positive development.’ De Jong thinks there will also be a minus for the second quarter.
“The contraction remains bad news”
Monthly data weakened in the first quarter, De Jong sees a further weakening in April, with investment in April down almost two and a half percent on a year earlier and with household consumption declining. “This certainly doesn’t look good for April.” According to De Jong, there must be “a notable improvement” to avoid re-recording a negative GDP figure in the second quarter. And thus end up in a recession.
Again De Jong warns against false optimism, that a recession will be mild because unemployment is so low. After all, recessions usually start with low unemployment, which then rises sharply.
Families
Which is good news: Dutch households had more to spend in the first quarter of this year than in the same period a year earlier. Real disposable income increased by 1.7%. (ie the increase in disposable income, adjusted for price increases, ed). According to Statistics Netherlands, this was due to higher wages under collective bargaining agreements and more hours worked.
There’s also a side note from De Jong: ‘It looks decent, but it’s still pretty sparse.’ According to De Jong, it is not true that every family has 1.7 percent more to spend in real terms. Not only has the figure been higher in recent years, even during the pandemic, the number of families has also increased.
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
