THE HAGUE, Netherlands (AP) — The Netherlands has fallen into a recession after exports and household spending fell back amid rising interest rates intended to rein in inflation, the country’s statistics office reported Wednesday.
The economy declined by 0.3% in the second quarter after shrinking 0.4% in the first three months of the year, Statistics Netherlands reported.
The Netherlands, a small nation that has long punched above its weight in global trade, is now treading water after its robust rebound following the global COVID-19 pandemic, said the statistics office’s chief economist, Peter Hein van Mulligen.
“After the coronavirus dip, the Dutch economy recovered much quicker and stronger than the rest of Europe. In the last year that has turned around,” he said.
The economies in the Netherlands’ neighbors, France and Belgium, both grew in the last quarter while another neighbor, European economic powerhouse Germany, stagnated.
Caretaker Economic Affairs Minister Micky Adriaansens insisted that the country’s economic foundation remains good, even as consumers and businesses grapple with the effects of inflation and interest rate hikes.
Adriaansens said she wants to keep “investing in the long-term challenges and looking at where we can tackle unnecessary price rises.”
While the country is officially in recession, the labor market remains strong, with unemployment close to all-time lows at 3.6%. “For every hundred job-seekers, there are 122 jobs,” said Hein van Mulligen.
The news that the country slid into a recession comes as the Netherlands faces political uncertainly after the ruling coalition resigned over the summer. A national election is scheduled for late November and is likely to usher in a long round of negotiations to form a new coalition.