The world economy is slowing down, but will we face a global recession soon?
Worldwide, economic growth is slowing down and the volume of global trade is decreasing. Although it is not likely that we will face a recession in the Netherlands soon, this global economic slow down does not leave the Dutch economy unaffected. As a result, expectations about the Dutch economy are also being adjusted. This can lead to a self-fulfilling prophecy, says Bas Jacobs, Sijbren Cnossen Professor of Public Economics at Erasmus School of Economics.
According to Bas Jacobs, Sijbren Cnossen Professor of Public Economics at Erasmus School of Economics, the world economy is suffering from political uncertainty. As a result, the volume of international trade is decreasing and this has negative consequences for all trade-driven economies - such as the Dutch and the German economy. The three situations that cause the greatest political uncertainty are the trade war between the US and China, the Brexit and the ongoing problems in Italy.
For the Netherlands, it is also important to look at what's happening in Germany. The German and Dutch economy are namely strongly interrelated and, as a result, a German economic slow down usually has a large direct effect on the Dutch economy. The German economy has already started to slow down since the beginning of 2019, and it is expected that no growth will be reported for the second quarter of 2019. In the Netherlands, we also see a downwards trend industrial production. However, even though the economic growth rate is decreasing, we do not expect the Dutch economy to contract in the second quarter.
Both Germany and the Netherlands will report their economic growth rates of the Q2 on Wednesday, 14 August.