AMSTERDAM (Reuters) – 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 0.4pc contraction in the first three months of the year.
Economic growth in the Netherlands had been almost 5pc 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 1.6pc, while exports were 0.7pc lower than in the first three months of the year. Inflation in the Netherlands has dropped since hitting a peak of 14.5pc in September last year, but was still relatively high at around 6pc in the second quarter of 2023.
Earlier, the economy ministry in berlin had said Germany's economy was not likely to see a sustained recovery in the coming months based on early indicators such as new orders and business climate.
"On the domestic front, the expected cautious recovery in private consumption, services and investment is showing the first signs of hope, which are likely to strengthen as the year progresses," said the ministry in its monthly report.
"At the same time, the still weak external demand, the continuing geopolitical uncertainties, the still high rates of price increases and the increasingly noticeable effects of monetary tightening are dampening a stronger economic recovery."