Dutch economy enters recession as inflation bites

The Dutch economy has entered a recession as it shrank 0.3 per cent on a quarterly basis in the second quarter, a first estimate published by Statistics Netherlands on Wednesday showed. The euro zone's fifth-largest economy shrank for the second consecutive quarter, after a 0.4 per cent contraction in the first three months of the year.

Economic growth in the Netherlands had been almost 5 per cent per year in 2021 and 2022 in a quick recovery from a COVID-19 slump.

The first recession since the pandemic was driven by a drop in consumer spending and exports, as surging inflation drove up food prices and energy bills in the Netherlands and its trading partners.

Consumer spending fell 1.6 per cent, while exports were 0.7 per cent lower than in the first three months of the year. Inflation in the Netherlands has dropped since hitting a peak of 14.5 per cent in September last year but was still relatively high at around 6 per cent in the second quarter of 2023.