Netherlands: GDP contracts in the third quarter
November 15, 2022
According to the first quarterly estimate, GDP dropped 0.2% on a seasonally adjusted quarter-on-quarter basis in the third quarter, contrasting the 2.4% expansion recorded in the second quarter. Q3's reading was the worst since Q2 2020.
The downturn was broad-based, with private consumption, public spending, fixed investment and exports all weakening. Private consumption growth fell to 0.1% in Q3 (Q2: +0.8% s.a. qoq). Public consumption dropped 0.1% in Q3 (Q2: +0.1% s.a. qoq). Meanwhile, fixed investment plunged at the steepest rate in over two years, contracting 1.7% in the third quarter (Q2: +5.0% s.a. qoq).
On the external front, exports of goods and services growth moderated to 0.9% in Q3 (Q2: +3.1% s.a. qoq). In addition, imports of goods and services growth slowed to 1.0% in Q3 (Q2: +2.2% s.a. qoq).
On an annual basis, economic growth slowed markedly to 3.1% in Q3, from the previous quarter's 5.1% expansion. Q3's reading marked the slowest growth since Q1 2021.
Looking to Q4, activity is set to contract further in qoq terms. That said, private consumption should have received support from lower energy bills as of November, following the government’s agreement with energy suppliers.
On the outlook, ING analysts commented:
“The third-quarter figure for GDP is the start of a mild technical recession that we projected for the Dutch economy. We see sentiment indicators based on surveys declining further, in line with a weakening global business cycle. […] Still, the situation is one of high capacity utilisation. Staff shortages are still the key factor limiting production and sales for the majority of businesses […] The economy is at a turning point of worsening momentum from a high level, and there is no reason for us to project a long and deep recession.”