Netherlands: Consumer sentiment deteriorates further in January
Consumer confidence soured to minus 28.0 in January, from December’s minus 25.0. Consequently, the index moved further south of the neutral zero-threshold that separates pessimism from optimism among consumers.
The headline drop came on the back of worsening views on the economic climate in the country and a slide in consumers’ willingness to buy. Views regarding the Dutch economy in both the past and in the next 12 months deteriorated, and attitudes towards households’ financial situation in the same periods worsened in tandem.
Private consumption growth should pick up pace this year amid a tight labor market and the fading impact of the pandemic and supply bottlenecks. However, the balance of risks is skewed to the downside, with analysts at the EIU adding:
“We have downgraded our private consumption growth forecast for the first quarter of 2022 after the government implemented a new lockdown in mid-December. The impact on our overall GDP growth forecast for 2022 is mild […]. […] The quarterly pattern of activity is likely to be volatile, reflecting the likelihood that the pandemic will continue to pose problems, with Omicron (and probable future variants) set to affect the pace of growth. Once the pandemic has eased, […] [h]igher inflation in the near term will erode disposable incomes, preventing even stronger growth in private consumption in 2022.”