Today’s figures from the Netherlands Statistical Institute show that the Dutch economy grew by 4.5 percent last year compared to the previous year. Perhaps unexpectedly, also because of high inflation and contraction in the third quarter. What does this number mean for our wallet? What are the expectations for this year? Five questions about those numbers.
How does this affect our wallets?
“First of all, it’s important to know that these numbers are from last year, so they don’t have much of an impact on our wallet today,” says Charan van Krevel, an economist at Radboud University.
He points out that this figure says something about gross domestic product (GDP). “And that doesn’t say much about your purchasing power or what you can do with your money.”
Growth can affect our revenues, according to ING chief economist Marieke Blom: “When there is economic growth, it can have a positive impact on wages.
Despite high inflation, households in particular spent more. What about this?
Blom points out that some families have had to go to the Tafel because of the rising prices. “But there are also many families who are able to continue their normal shopping but spend less money than before.”
Van Krevel: “Economic growth is calculated by comparing it to the same period last year. 2021 was another Corona year, especially when less wasted on culture and entertainment. So now you can see the growth there.”
Why has there been more growth in the Netherlands than in the rest of Europe?
Belgium and France grew by 0.1 percent and 0.2 percent, respectively, in the fourth quarter compared to the third quarter, while Germany had to cope with a 0.2 percent decline. For comparison: The Netherlands posted 0.6 percent quarterly growth.
Blom believes this is due to the structure of the Dutch economy. “Substantially more were exported. It’s about the structure of our economy. The German economy has a larger, energy-intensive industrial sector that is under more pressure than the Netherlands. We have a large technology sector that continues to be successful because it is less dependent on rising energy prices.”
Van Krevel says the numbers give a distorted picture. “The Netherlands is still catching up. France and Belgium grew faster than we did in 2021 in terms of GDP. We were still under quarantine earlier this year, so our growth has slowed a bit compared to others.”
What are the expectations for this year?
Blom expects growth: “We’re seeing a number of positive factors, such as the reopening of the Chinese economy and falling gasoline prices. But there are also pressing factors, such as a rate hike.” After a small decline in the first quarter, it still expects moderate growth in 2023.
Van Krevel actually expects a slight recession. “The European Central Bank is expected to raise interest rates further. Inflation is still high and the labor market is tight.”
Higher interest rates mean borrowing becomes more expensive, which can slow business and consumer spending. However, this need not necessarily have a negative effect, as it can also have a suppressive effect on inflation. “Assuming energy prices don’t rise very sharply because they have a huge impact.”
How should we look at this economic growth?
Van Krevel says last year’s economic growth was positive, but we shouldn’t focus on that either. “We prioritize economic growth too much. It often comes with higher social and environmental costs, so this does not necessarily mean that our lives are better overall. GDP is a measure of the warmth of the economy, not its quality.”
Source: NOS
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
