This is stated by the BIS in its annual report published on Sunday. The think tank urges central banks to take ‘timely and decisive action’. “The risk of stagflation looms over the global economy as the threat of a new era of inflation coincides with weaker growth prospects and heightened financial vulnerabilities.”

    Stagflation is a combination of an economic downturn and high inflation. In the Netherlands, prices rose by 8 to 10%, compared to a year earlier. De Nederlandsche Bank (DNB) thinks that the economy will be around zero growth in the first three quarters of this year. Rabobank predicts ‘a mild recession’ from the fourth quarter of this year.


    The specter is the stagflation of the 1970s, when two oil crises led to an energy crisis and a deep recession. Think tank BIS thinks that a repeat of this is ‘unlikely’ because the monetary policy of central banks is now better and because of ‘less dependence on energy’. Yet the BIS economists warn of ‘financial vulnerabilities’ such as high debt and overvalued investments.

    Last week, the Central Bureau of Statistics (CBS) announced that consumer confidence is at an all-time low. High inflation and the war in Ukraine are causing uncertainty for many Dutch people.

    First signal

    Until now, retailers have hardly noticed this. But last week, ING saw a decline in consumer spending. “After all, it cannot be otherwise than that we will see the persistent pessimism reflected in lower spending,” said ING economist Marten van Garderen. “To get an indication of how consumer spending has developed in the rest of the second quarter, we are taking a closer look at our transaction data. They give us a first indication of how consumer spending (pin + cash + online) is developing ‘now’.”

    ING does not yet speak of a trend break. But the recent developments are striking: „And what do we see? After an upward trend in the first two months of this quarter, the total value of transactions in June is set to decline. We should interpret this as a first signal that consumers may be taking it easy.”

    Furniture stores have previously indicated to De Telegraaf that customers are becoming more cautious. It is not yet visible in the macro figures of Statistics Netherlands. Statistics Netherlands recently reported that consumer spending in April was almost 15% higher than a year earlier.

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