Cautiously positive outlook for the Dutch economy
Despite continuing uncertainty about the economic outlook and a particularly high inflation rate in 2022 (11.6%), the Dutch economy grew by 4.5% in 2022. This growth was above the average for the European Union and higher than that of large neighbouring countries.
This was mainly due to two developments:
The greater number of hours worked (+441,000 jobs), which generated more added value for the economy. Accordingly, consumers still had a relatively high disposable income, despite inflation.
The strong growth of private consumption during the summer months, which was the effect of a first summer without COVID-19 restrictions in three years. For example, the culture and recreation sector recorded very strong growth (+34%), whereas it had contracted in 2021 in comparison with 2020 (-4%).
Although consumer confidence fell to historically low levels, especially in the second half of 2022, household consumption of goods and services remained high (+15.1% in value terms). Moreover, exports of goods and services also remained buoyant, which was favourable for the Dutch industry and services sectors in particular.
"The Dutch economy grew by 4.5% in 2022"
The greatest pain in the occupier market has therefore mainly been felt on the costs side, above all in cases where few, if any, of the higher costs could be passed on to the client on the revenue side.
Businesses whose circumstances have deteriorated the most are those most affected by the increased costs of labour, commodities, electricity, gas and financing. This is evident, for example, from Coolblue’s figures1, which show higher turnover but a fall in net profit due to significant cost increases.
Logically, once these costs return to normal, confidence among consumers and producers will increase again. A favourable development is that gas prices are falling faster than expected:
in its base scenario, CPB Netherlands Bureau for Economic Policy Analysis (CPB) had expected gas prices to normalise at a level of approximately €130 per MWh by mid-2023. As it turns out, the price is now even lower than CPB’s low scenario estimate: approximately €50 per MWh. However, this will still not save many companies as the costs of gas, foodstuffs and other commodities in general are expected to remain at a high level due to the ongoing war in Ukraine.
Wage costs too are rising owing to the combination of a tight labour market and inflation and can in themselves drive up inflation. As interest rates for commercial lending will also remain on the high side, raising additional capital for growth will continue to be more expensive than in previous years.
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