Netherlands GDP Q2 2016


Netherlands: Economic growth in the Netherlands maintains momentum due to fixed investment

August 12, 2016

In the second quarter of 2016, economic activity in the Netherlands maintained the pace of growth observed in the first quarter, on the back of stronger fixed investment. Conversely, both private and government consumption weakened compared to Q1. GDP grew 0.6% in seasonally-adjusted terms over the previous quarter, according to preliminary data released by Statistics Netherlands on 12 August. The reading mirrored Q1’s revised print (previously reported: +0.5% quarter-on-quarter seasonally-adjusted), marking the ninth consecutive quarter of growth and overshot market expectations of a milder 0.5% expansion.

In Q2, fixed investment growth accelerated from the 1.3% recorded in Q1 to a 2.5% increase. On the contrary, private consumption slowed from the 0.5% growth recorded in the first quarter to 0.2%. Moreover, government consumption lost some steam, decelerating from the 0.7% expansion tallied in Q1 to a 0.5% rise in Q2.

On the external front, growth in exports of goods and services stalled, recording a flat result in Q2, down from the 1.0% growth observed in Q1, marking the lowest reading in three year. Imports of goods and services swung from Q1’s 0.6% increase to a 0.2% contraction in Q2, tallying the weakest result since Q1 2013. Consequently, the external sector’s net contribution to overall economic growth dropped from 0.4 percentage points in Q1 to 0.2 percentage points in Q2, tallying the second consecutive positive contribution to GDP.

The economy grew 2.3% in Q2 over the same quarter last year, which represented an acceleration compared to Q1’s 1.5% expansion.

Commenting on the release, Dimitry Fleming, Senior Economist at ING, adds:

“After 0.6% in 1Q (revised from 0.5%), Dutch GDP expanded at the same pace in 2Q. Growth remained broad-based, with private consumption, investment and net exports all contributing positively to GDP. Since 3Q14, total domestic demand has increased in each quarter. The increase in consumption is driven by strong increases in purchasing power, which in turn is fuelled by tax cuts, falling consumer prices and employment growth. Homebuying activity near record levels is buoying housing-related spending. Within investment, housing is an important driver too, but there is also increased spending on new vehicles, buildings and machines. Sector-wise, the main engine of growth was the commercial services sector, but construction output rose too in 2Q. Meanwhile, in the industry there was some pay-back, after a period of strong expansion. PMI indicators point to a return of positive growth in 3Q.”

The government expects GDP to expand 1.5% in 2016 and 1.9% in 2017. For 2016, FocusEconomics Consensus Forecast panelists see GDP growing 1.6%, which is down 0.1 percentage points from last month’s projection. For 2017, the panel expects the economy to expand 1.5%.

Author: Massimo Bassetti, Economist

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Netherlands GDP Chart

Netherlands GDP Q2 2016 3

Note: Quarter-on-quarter changes of seasonally adjusted GDP and year-on-year variation in %.
Source: Statistics Netherlands (CBS) and FocusEconomics Consensus Forecast.

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