Netherlands: Economy contracts for the first time in more than two years
November 15, 2011
In the third quarter, GDP contracted 0.3% in seasonally adjusted terms over the previous quarter, according to the first provisional estimate released by Statistics Netherlands (CBS, Centraal Bureau voor de Statistiek) on 15 November. The reading marked the first contraction since the second quarter of 2009 and contrasted market expectations that had the economy advancing 0.2%, which would have mirrored the expansion observed in the previous quarter. On an annual basis, the economy grew 1.1%, down from the 1.6% expansion registered in the second quarter. Fixed investment contracted a seasonally adjusted 1.1% over the previous quarter, which came on top of a 1.6% decline in the April-June period. A downward shift in inventories also contributed decisively to the decline in the third quarter. Simultaneously, total consumption contracted 0.2%, unchanged from the previous quarter, as an improvement in private consumption (Q2: -0.4% quarter-on-quarter; Q3: -0.2% qoq) was offset by a decline in government consumption (Q2: +0.1% qoq; Q3: -0.3% qoq). In the external sector, both exports and imports deteriorated. Exports of goods and services slowed from a 1.0% expansion in the second quarter to a subdued 0.3% increase in the third quarter. Imports, meanwhile, swung from 0.5% growth in the second quarter to a 0.2% contraction. As a result, the external sector's net contribution to overall growth was virtually unchanged over the previous quarter at 0.4 percentage points. The government currently expects the economy to expand 1.5% this year before moderating to a subdued 1.0% growth rate next year.