A river under the bridge in the Netherlands

Netherlands GDP Q4 2023

Netherlands: Economy exits brief recession in Q4

After a short-lived recession, economic activity bounced back, growing 0.3% on a seasonally adjusted quarter-on-quarter basis in the fourth quarter, above the 0.3% contraction recorded in the third quarter. Q4’s reading marked the best result since Q4 2022. On an annual basis, economic activity dropped 0.5% in Q4, following the previous period’s 0.8% decrease. Overall, in 2023, the economy posted a shallow expansion of 0.1%, decelerating notably from the prior year’s 4.3% growth rate.

The upturn reflected improvements in private consumption and exports compared to the previous period.

On the domestic front, household spending rebounded, growing 1.8% quarter on quarter on a seasonally adjusted basis in Q4, which marked the best reading since Q3 2021 (Q3: -0.3% s.a. qoq). In addition, fixed investment contracted at a milder pace of 2.1% in Q4, from the 2.5% contraction in the previous quarter. Less positively, public spending growth was the slowest since Q3 2023, easing to 0.4% (Q3: +1.0% s.a. qoq).

Externally, exports of goods and services rebounded, rising 0.3% seasonally adjusted quarter on quarter in the fourth quarter, which marked the best reading since Q4 2022 (Q3: -2.0% s.a. qoq). Meanwhile, imports of goods and services grew 0.3% in Q4 (Q3: -2.7% s.a. qoq).

The economy is expected to post another timid expansion in 2024, as private spending remains subdued, public consumption growth decelerates and investment contracts. Meanwhile, a sluggish recovery in external demand will keep exports depressed.

ING analyst Marcel Klok commented on the outlook:

“Because of revisions in previous quarters and statistical carry-over effects, it looks like the Dutch economy is heading for around 1% growth in 2024. This is still below the long-term growth potential. While investment will remain a drag, the main growth driver will be consumption. This includes public consumption, despite the fact that a new government hasn’t yet been formed yet following the November 2023 parliamentary elections, as aging and policy paths initiated by the previous government are still causing higher spending.”

EIU analysts said:

“A weak recovery is likely in 2024. Monetary policy, both in the euro zone and other major economies, will start to ease in the second half of the year, which will support a slow recovery in credit growth (affecting both household spending and business investment). However, external demand is set to remain sluggish, meaning that there will be no boost from exports. Fiscal consolidation is likely to result in a slowdown in government consumption growth.”

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