A river under the bridge in the Netherlands

Netherlands GDP Q2 2023

Netherlands: GDP declines again on a sequential basis in Q2

The economy contracted 0.3% on a seasonally adjusted quarter-on-quarter basis in Q2, following the first quarter’s 0.4% contraction.

Household spending declined 1.6% in Q2, marking the worst result since Q1 2021 (Q1 2023: -0.2% s.a. qoq). Government spending growth picked up in Q2, expanding 0.7% (Q1 2023: +0.4% s.a. qoq). Meanwhile, fixed investment growth slowed to 1.3% in Q2 from the 2.7% increase logged in the prior quarter.

Exports of goods and services fell 0.7% on a seasonally adjusted quarterly basis in Q2, which contrasted with the first quarter’s 0.2% expansion. Meanwhile, imports of goods and services growth picked up, increasing 0.5% in Q2 (Q1 2023: +0.4% s.a. qoq).

On an annual basis, the economy contracted 0.3% in Q2, after the previous period’s 1.9% increase. Q2’s reading marked the weakest since Q1 2021.

The economy is projected to rebound in quarter-on-quarter terms in Q3. Lower inflation, strong wage growth and a still-tight labor market will reduce the burden on real incomes and private consumption. That said, higher interest rates from the ECB and weak prospects for the German economy will weigh on output. Moreover, weaker global growth will continue to take its toll on exports and re-exports.

On the outlook, Marcel Klok from ING commented:

“One positive is that wage growth surpassed inflation, but the repercussions of higher interest rates and weak international developments continue to weigh on the Dutch outlook. We see that sentiment figures are worsening and the fall of the government may also slow government expenditure growth a little bit.”

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