Netherlands: Economic growth remains solid in Q4 2019
February 13, 2020
The Dutch economy ended last year on a solid footing and continued growing markedly above the Euro area average: The economy expanded 0.4% quarter-on-quarter in Q4 2019, matching the print of the previous three quarters, buttressed by robust private consumption, fixed investment and external trade. Annual economic growth, on the other hand, slowed to 1.5% in the fourth quarter from 1.9% in the third. Consequently, taking 2019 as a whole, the economy expanded 1.7% from 2018, a five-year low.
Detailed quarterly data showed that a strong expansion in private consumption (Q4: +0.7% quarter-on-quarter; Q3: +0.1% qoq) led domestic demand to rebound. Household consumption was likely buttressed by a further reduction in the unemployment rate, with the seasonally-adjusted rate falling to 3.2% in December, the lowest since current records began in January 2003. Moreover, fixed investment recovered from a 0.2% contraction in the prior quarter and increased 1.2% in the fourth. Growth in government spending, on the other hand, slowed to 0.3% in Q4 from 0.5% in the prior period.
On the external front, exports of goods and services grew at a softer pace in the final quarter of last year (Q4: +0.7% qoq; Q3: +1.2% qoq), owing to flatlining services exports. Imports of goods and services also increased more tepidly in the quarter (Q4: +0.6% qoq; Q3: +1.1% qoq) as imports of services contracted sharply and for the second consecutive quarter. Nevertheless, the trade balance continued to support the overall economy.
This year, economic growth is expected to decelerate slightly on softer domestic demand as more moderate fixed investment growth will more than offset robust public and private consumption. Moreover, the balance of risks remains skewed to the downside, chiefly owing to lingering external headwinds in the form of protracted Sino-American trade tensions, Brexit uncertainty, a struggling German industrial sector and the outbreak of the novel coronavirus.
Author: Jan Lammersen, Economist