Domestic Demand in Netherlands

Netherlands - Domestic Demand

Economic growth remains solid in Q3, matches preliminary estimate

A second reading of national accounts data revealed that the economy grew 0.4% quarter-on-quarter in the third quarter, matching the preliminary estimate and Q2’s result, and continuing to cruise above the Euro area average. Economic growth in the three months ending in September was mainly buttressed by government consumption and the external sector. Annual economic growth in the third quarter also matched the previous estimate of 1.9%, up from the 1.8% expansion in the prior quarter.

On the domestic front, fixed investment declined (Q3: -0.3% quarter-on-quarter, previously reported: -0.2% qoq; Q2: +0.8% qoq). Fixed investment chiefly contracted due to a marked drop in public investment outlays, while private investment growth eased. On the other hand, public consumption growth accelerated notably from 0.1% in the second quarter to 0.5% in the third. Meanwhile, private consumption grew a revised 0.1% over the prior quarter in Q3 (previously reported: +0.2% qoq), notably down from the stellar 0.7% expansion logged in the second quarter, which had marked a five-quarter high.

On the external front, net exports continued contributing positively to economic growth. Exports of goods and services grew a revised 1.2% quarter-on-quarter in Q3 (previously reported: +1.1% qoq), slightly down from the 1.3% expansion logged in the prior quarter. Imports of goods and services also grew 1.2% over the prior quarter in Q3, up from the 1.0% expansion logged in Q2.

Looking ahead, the Dutch economy should continue growing at a robust, albeit more moderate pace in 2020. Domestic demand is seen losing some steam owing to weaker investment growth, likely due in part to ongoing uncertainty over the protracted Sino-American trade conflict and Brexit.

FocusEconomics Consensus Forecast panelists see GDP growing 1.4% in 2020, which is unchanged from last month’s projection. For 2021, the panel expects the economy to expand 1.5%.