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Dutch economy grows 2.6% in Q2 2022 despite soaring inflation

Reuters
Dutch economy grows 2.6% in Q2 2022 despite soaring inflation

DROUGHT. A low water level of the Waal River is seen at the quay of Nijmegen due to drought in Nijmegen, Netherlands, August 8, 2022.

Piroschka van de Wouw/Reuters

Backed by a strong labor market and record-low levels of unemployment, the Dutch economy has performed more strongly than its eurozone peers throughout the COVID-19 crisis

AMSTERDAM, Netherlands – Economic growth in the Netherlands surprisingly jumped to 2.6% in the second quarter compared with the previous three months, as household spending boomed despite soaring inflation and companies increased their investments.

The strong expansion confounded expectations among economists that growth would remain at roughly the same 0.5% pace seen in the first quarter of 2022.

“These numbers show that, despite recent worries, a recession is not yet in sight,” Statistics Netherlands chief economist Peter Hein van Mulligen said.

Backed by a strong labor market and record-low levels of unemployment, the Dutch economy has performed more strongly than its eurozone peers throughout the COVID-19 crisis.

Growth was again much stronger than the euro area average of 0.7% in the second quarter of 2022.

Van Mulligen said the country’s biggest worry was a shortage of staff, as the labor market in the second quarter was tighter than ever.

The number of vacancies in the Netherlands has been higher than the number of people looking for a job for over a year, as employment continued to grow especially in health care, education, and the leisure sectors.

The pickup in April-June left the eurozone’s fifth largest economy 5.3% bigger than in the same period a year before.

Growth was spurred by a 7% increase in household consumption relative to the second quarter of 2021, when spending was still constrained by COVID-19 lockdown measures, even though inflation rocketed to around 9%.

This spending spree might not hold, however, as fears of ballooning energy bills and rising costs of living have pushed consumer confidence down to its lowest level on record in recent months.

Confidence among producers remained stronger, although their optimism has also waned due to inflation and the difficulties in hiring new staff.

Investments in the second quarter were 5% higher than a year before, as the housing market boom continued and companies invested heavily in new machines, software, and buildings, while exports increased almost 6%. – Rappler.com

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