Netherlands: Economy contracts more than expected
November 15, 2012
In the third quarter, GDP contracted 1.1% in seasonally adjusted terms over the previous quarter, which represents the sharpest drop observed since Q2 2009. The reading contrasted the 0.1% expansion recorded in the previous quarter and widely exceeded market expectations, which had anticipated the economy contracting a softer 0.2%. On an annual basis, the economy contracted 1.6%, a deterioration over the 0.4% drop registered in the second quarter. The stronger-than-expected contraction came on the back of a worsening external sector as well as a depressed domestic sector. Total consumption deteriorated over the previous quarter, as private consumption contracted 0.6% quarter-on-quarter (Q2: -0.3% qoq) and government consumption dropped 0.1% (Q2: -0.2% qoq). In addition, gross fixed investment declined a sharp 3.1% over the previous quarter (Q2: -1.1% qoq). Moreover, the contribution from the external sector to overall economic growth deteriorated from plus 0.6 percentage points in Q2 to minus 1.2 percentage points. Exports of goods and services swung from a 2.6% expansion in the second quarter to a 2.4% contraction in the third, while imports contracted a softer 1.1% in Q3 (Q2: +2.1% qoq).