Netherlands Economic Outlook
After deteriorating sequentially in Q3 last year, activity bounced back in Q4 due to accelerations in private consumption, public spending and exports, as well as a rebound in fixed investment. In Q1 this year, our panelists project a contraction in activity. In January, industry contracted annually at the steepest pace since April 2020, at the start of the Covid-19 pandemic. That said, inflation decelerated and wage growth picked up in January–February, and consumer confidence improved over the quarter, boding well for private spending. In politics, the Farmer-Citizen Movement (BBB) won 137 seats in March’s provincial elections—more than double that of the second-place party, the VVD. Its victory will complicate Dutch politics ahead, especially environmental policy—opposition to the planned curbs on nitrogen emissions is the signature policy of the BBB.
Netherlands Inflation
Harmonized inflation rose to 8.9% in February (January: 8.4%) due to higher price pressures for food, clothing, housing, plus restaurants and hotels. This year, inflation will more than halve from 2022 due to a strong base effect, capped energy prices and declining commodity prices. A key factor to watch is the planned permanent shutdown of the Groningen gas field in October.