Netherlands: Economy grows at stellar pace in Q2
September 22, 2017
Revised Q2 GDP data for September did not hold any surprises: The second reading confirmed that the Dutch economy grew a strong 1.5% in seasonally-adjusted quarterly terms. The data released by the Central Bureau of Statistics (CBS) on 22 September showed that the result came on the back of a solid performance by the external sector and robust growth in private consumption. The pace of expansion in Q2 was only the third time in nearly two decades that the Dutch economy grew at such a rapid rate. In addition, the economy has been expanding for 13 consecutive quarters.
Stronger private consumption, driven by increased spending on both goods and services, was likely supported by a decline in unemployment; 53,000 jobs were added in the second quarter. Private consumption grew 0.8% over the previous quarter, above Q1’s 0.2% increase. A strong recovery in the housing market likely also supported stronger consumer spending. Meanwhile, fixed investment recorded its second consecutive quarterly expansion, growing 0.8%, which added to the positive news. Government consumption also rebounded after a contraction in the first quarter.
On the external front, political uncertainty around the Brexit negotiations—the UK is a major trading partner—has not seemed to have had an impact thus far. Exports grew 1.8% over the previous quarter in Q2, above Q1’s 1.6% increase. Meanwhile, import growth slowed from 2.0% in Q1 to 1.2% in Q2.
A year-on-year comparison confirmed that the economy grew 3.3% in the quarter, picking up steam slightly from the previous quarter’s 3.2% annual increase.
In the coming quarter, economic growth is likely to slow somewhat but remain at strong levels. Consumer confidence remains elevated and firmly entrenched above the crucial zero-point mark, indicating optimism among Dutch households. Although business confidence has slipped in the first two months of the third quarter, it remains in expansionary territory, which adds to the likelihood that the momentum noted in Q2 will be sustained in Q3.
Author: Jan Lammersen, Economist