Consumption in Netherlands

Netherlands - Consumption

GDP growth flatlines in the first quarter

Economic growth flatlined in the first quarter of 2022 on a seasonally-adjusted quarter-on-quarter basis (Q4 2021: +1.0% s.a. qoq).

Household spending fell 0.1% in the first quarter, in an improvement from the fourth quarter's 0.5% contraction. Government consumption deteriorated, contracting 4.0% in Q1 (Q4 2021: +2.2% s.a. qoq). Fixed investment growth moderated to 0.8% in Q1, from 3.2% in the previous quarter.

On the external front, exports of goods and services fell 0.5% on a seasonally-adjusted quarterly basis in the first quarter, which was above the fourth quarter's 1.4% contraction. In addition, imports of goods and services declined at a more moderate pace of 1.3% in Q1 (Q4 2021: -1.9% s.a. qoq).

On an annual basis, economic growth sped up to 7.0% in Q1, following the previous period's 6.5% increase. Q1's reading marked the best result since Q2 2021.

Marcel Klok, senior economist at ING, commented:

“As the Q1 2022 figure for GDP was more or less in line with our projections, substantial revisions to our 2022 forecast (2.7%) do not seem necessary for now. […] Consumer confidence, however, has reached a record low, in line with high (energy) inflation expectations that are expected to erode real incomes. This may be the cause of one or several quarters of declining private consumption, as we forecast in our base case. Although this and continuing worldwide supply chain issues might translate into an occasional negative quarterly GDP figure, we do not currently forecast an outright, long-lasting recession for the Dutch economy. For that, demand still simply seems too strong.”

FocusEconomics Consensus Forecast panelists see GDP expanding 3.3% in 2022. For 2023, the panel forecasts the economy to expand 2.0%.