GDP swings into contraction in the first quarter

GDP dropped 0.1% on a seasonally adjusted quarter-on-quarter basis in the first quarter, contrasting the 0.3% expansion logged in the fourth quarter of last year. The figure fell short of market expectations. On an annual basis, GDP dropped 0.7% in Q1, following the previous period's 0.4% contraction.

Private consumption growth moderated to 0.7% in seasonally adjusted quarter-on-quarter terms in Q1 from a 2.0% expansion in Q4 2023. Government consumption growth, meanwhile, was unchanged at Q4’s 0.6% in Q1. More positively, fixed investment rebounded, growing 0.4% in Q1 from the 1.7% contraction recorded in the previous quarter. On the external front, growth in exports of goods and services was unchanged from Q4 at 0.1% in Q1. Conversely, imports of goods and services flatlined in Q1 (Q4 2023: +0.2% s.a. qoq).

ING’s Marcel Klok commented on the outlook: “While we still expect private investment to remain a drag on growth in the future, we forecast trade developments to improve. This should cause the return of Dutch export growth in the current quarter. At the same time, household consumption is expected to continue to be one of the main drivers for GDP, as nominal income developments are expected to outpace inflation by a few percentage points. Also, public consumption is likely to remain one of the main contributions to the expansion.”

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