Life is getting more expensive, consumer confidence is at an all-time low and staff shortages are felt on virtually every business floor. Still, the Dutch economy is doing quite well at the moment, economists tell NU.nl. There are, however, plenty of uncertainties that could change that in the course of the year.
“It is actually a very special time,” summarizes the current economic period, chief economist Peter Hein van Mulligen of Statistics Netherlands (CBS), which will publish figures on economic growth for the first quarter on Tuesday.
With this Van Mulligen is referring to the sky-high inflation – partly caused by the ongoing war in Ukraine – and the labor market that only tightened in the first quarter and where the deficits are spiraling out of control.
At first glance, those two factors may point to bad news, but they don’t have to be. “We know that inflation is exceptionally high, but from a historical perspective that has no direct relationship with economic growth. And the tightness in the labor market means that the labor market is running very well and does not indicate a cooling down,” explains Van Mulligen.
The fact that consumers are no longer interested in it at the moment – consumer confidence is at an all-time low – does not mean that everyone is immediately on the cutting edge, says ING economist Marcel Klok. “People are strongly influenced by expected price increases, but you can’t translate that collapsed confidence one-on-one into spending.”
Potential bears on the road
Although a dent in confidence does not immediately translate into less spending, it does mean that we are concerned about the economic situation. With good reason: more and more people feel that life is getting more expensive. Due to the war in Ukraine, energy prices have been higher for longer, with the result that as time goes on, more and more people are presented with higher energy bills.
“And that mainly affects people with lower incomes, who will save and spend less as a result,” says Klok. ING therefore expects the economy to slow down in the course of the year, possibly even contracting in the third quarter.
Furthermore, the war in Ukraine and of the situation in China also have consequences for us. In short, there are enough uncertainties, but that does not mean that the dark clouds are gathering over the Dutch economy. “There are enough threats, but that does not have to lead to thunderstorms,” said Van Mulligen.
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