Netherlands Economic Outlook
After rebounding in sequential terms in Q4 last year, activity contracted in Q1 this year. Declining exports, stagnating private consumption and slower public spending growth more than offset an acceleration in investment. Turning to Q2, our panelists project a rebound. In April, wages accelerated, inflation decelerated, and the unemployment rate fell further compared to the Q1 averages. Moreover, consumer confidence improved in April–May, and the energy price cap in place since January continued to support disposable income, boding well for private consumption. That said, business optimism and hiring intentions fell in April compared to the Q1 average. In politics, on the heels of their victory in the provincial elections in March, the Farmer-Citizen Movement (BBB) is set to become a significant force in the Senate after the elections on 30 May.
Harmonized inflation accelerated to 5.8% in April (March: 4.5%) due to rebounding transport prices and a smaller decline in housing prices. Inflation is set to more than halve this year compared to last on a tougher base effect, capped energy prices and weaker demand. Rising commodity prices and a tight labor market are upside risks.