Netherlands: Economic activity contracts for third consecutive quarter
May 15, 2013
In the first quarter, GDP contracted 0.1% in seasonally adjusted terms over the previous quarter, according to the first estimate released by Statistics Netherlands on 15 May. The reading matched market expectations and represents an improvement over the 0.4% drop recorded in the previous quarter. Nonetheless, the economy still remains in a technical recession amid three consecutive quarters of contracting economic output.
The Q1 contraction came mainly on the back of depressed domestic demand. Public spending dropped 0.8% in the first quarter (Q4 2012: -0.1% quarter-on-quarter), whereas private consumption rebounded to a 0.4% rise (Q4: -1.1% qoq). In addition, gross fixed investment plunged 5.6% over the previous quarter (Q4: -1.5% qoq).
On the other hand, the contribution from the external sector to overall economic growth was positive, rising to 1.8 percentage points, well above the 0.5% rise in the same quarter the previous year. That said, the positive performance of the external sector in the first quarter was mostly the result of a plunge in imports, as exports of goods and services rose 1.0% qoq (Q4: +1.5% qoq), while imports fell by 1.3% (Q4: +0.6% qoq).
The government expects the economy to contract 0.5% in 2013. The Dutch Central Bank is more pessimistic and expects a 0.6% contraction in 2013 before a 1.0% expansion in 2014. For 2013, FocusEconomics Consensus Forecast panellists see GDP contracting 0.5%, which is down 0.1 percentage points from last month's Consensus. For 2014, the panel expects the economy to expand 1.0%.