First Germany, now Netherlands has officially entered into a recession, as reported by several sources. This marks the first recession for the Dutch economy since the pandemic.
The Dutch economy shrunk by 0.3 percent on a quarterly basis in the second quarter. This decline follows a contraction in the first quarter, thereby meeting the technical definition of a recession - two consecutive quarters of negative growth.
Both consumer spending and exports, two crucial pillars of the Dutch economy, have shown signs of weakness, contributing to the economic downturn.
This development comes as a surprise, as the Dutch economy had shown resilience earlier, growing by 4.5 percent in 2022. Moreover, the fourth quarter of 2022 had seen a decent expansion of 0.6% in the GDP.
Despite the high inflation rates, the Dutch economy had been expanding owing to resilient consumer spending and strong employment growth. However, the current scenario indicates a shift in this trend.
The last time the Netherlands faced a significant recession was in 1982, triggered by an economic crisis that led to major policy changes and wage behavior alterations.
The implications of this recession on the Dutch economy and its citizens are yet to be fully understood.