Netherlands Economic Outlook
According to a preliminary estimate, GDP declined again in sequential terms in Q2. In the third quarter, our Consensus is for mild GDP growth. Private consumption should benefit from wage gains above the rate of inflation, notwithstanding downbeat consumer confidence. However, business confidence turned pessimistic in August, while exports contracted at a faster annual rate in July than in Q2. Moreover, higher interest rates will dampen overall economic activity. In other news, on 19 September, the caretaker government presented the 2024 budget. It includes additional expenditure amounting to 0.2% of GDP, which is specifically targeted at poverty reduction. That said, Parliament may request amendments that would further increase government spending.
Harmonized inflation decelerated sharply to 3.4% in August (July: 5.3%) due to softer price pressures for food and energy. Inflation will more than halve this year from 2022 due to slower demand growth and lower average energy prices. Higher-than-expected commodity prices and labor market tightness pose upside risks.