Netherlands: Economic growth slows to over two-year low in the third quarter
December 24, 2018
A second reading of national accounts data released on 24 December confirmed that the economy lost steam in the third quarter, with GDP expanding 0.2% over the previous period (Q2: +0.7% quarter-on-quarter). Although the headline reading was unchanged, data showed that the contributions of private consumption and the external sector were softer than previously estimated. Compared to the same quarter a year ago, the economy increased 2.4%, down from 3.1% in the second quarter.
Final domestic demand was weak in the third quarter. Private consumption growth flatlined in the third quarter (Q2: +0.2% qoq), despite a falling unemployment rate and elevated consumer confidence. Public consumption was flat in the third quarter, contrasting the 0.1% quarter-on-quarter growth in the second quarter. Fixed investment was also flat over the previous period in the third quarter, although this number was revised up from the previously reported 0.5% contraction (Q2: +0.8% qoq).
On the external front, growth in services exports edged up from the previous quarter in Q3 although merchandise exports slowed. Hence, overall export growth eased from 1.4% in the second quarter to 1.2% in the third quarter. Furthermore, overall import growth picked up significant pace (Q2: +0.4% qoq; Q3: +1.4% qoq) on the back of a marked accelerated in merchandise imports.
This year, the economy is expected to continue growing at a solid, albeit more moderate clip, supported by a tight labor market and a mildly expansionary fiscal budget. Risks remain present in the external economy, however. The ongoing trade spat between the U.S. and China as well as tensions between Washington and Brussels cloud the outlook. Furthermore, a disorderly Brexit—with the United Kingdom’s exit from the EU still shrouded in uncertainty—would dent economic growth.
Author: Jan Lammersen, Economist