The second quarter saw the Dutch economy growing twice as fast as in the preceding quarters. According to provisional figures of Statistics Netherlands, gross domestic product (GDP) advanced no less than 1.5% relative to the previous quarter (qoq). That is a lot higher than expected and also well ahead of average eurozone growth (0.6% qoq). Moreover, GDP growth for the first quarter has also been revised up (from 0.4% to 0.6%).
All expenditures contributed to the strong growth
All spending components drove the expansion in the second quarter. The largest contribution came from net exports (exports – imports) and household consumption. These accounted for 0.7 pps and 0.4 pps of GDP growth respectively.
Investment in fixed assets rose as well, albeit at a somewhat slower pace than in the (very strong) first quarter. The growth rate of residential investment is gradually decelerating, but remained a robust 2% qoq.
Although impressive, the economic acceleration needs to be put in some context. For several years, GDP has been tempered by the steady reduction in natural gas extraction in the province of Groningen. This continued to be the case in the first quarter. Adjusted for this factor, growth would have worked out at 0.9% qoq for the first quarter and about 1.4% for the second quarter. That is still sizeable, but shows that the actual acceleration in the second quarter was slightly lower.
GDP forecast for 2017 sharply higher
Thanks to the strong GDP figure for the second quarter and the upward adjustment in the first quarter, growth for the full year 2017 will be higher than expected – even if the growth rate over the summer were to fall back in response to the strong second quarter. Our new growth forecast for 2017 will probably be raised to 3% or higher.