Dutch economy still surprisingly strong

by: Nico Klene

  • The Dutch economy is set to grow almost 3% this year – comparable with the growth rate in 2017. We kept our GDP forecast unchanged
  • Despite the deceleration early in the year, GDP growth in the first half was barely lower than average quarterly growth in 2017. The eurozone GDP, however, clearly lost traction in the first two quarters. So the Netherlands is doing better than the eurozone
  • After the first-quarter contraction, exports picked up strongly in the second quarter (relative to the previous quarter), helping to boost GDP growth from 0.6% to 0.8%
  • Exports and domestic spending (consumption, investment, government spending) will both contribute to growth in 2018 and 2019
  • In 2019 Dutch economic growth will work out lower, though remaining a robust 2½%
  • The number of jobs is rising strongly, but unemployment will not fall much further. Most jobs are going to newcomers in the labour market
  • The economic outlook remains bright but risks of setbacks are mounting. The reasons include the ongoing trade conflict with the US and the threat of a hard Brexit
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Dutch economy is doing surprisingly well

The Dutch economy is still doing surprisingly well. Evidently, our national economy is rising above the deceleration in the eurozone as a whole. While the eurozone gross domestic product (GDP) clearly lost traction in the first two quarters compared to average quarterly growth in 2017, the Netherlands barely paused for breath. Admittedly, Dutch GDP growth also slackened in the first quarter, but rapidly bounced back in the spring.

Both domestic spending and exports continue to grow. The contraction of exports in the first quarter seems to have been a one-off dip. Dutch confidence indicators have declined from their extremely elevated levels in February, but remain high. We therefore expect the economy to maintain momentum, though the pace of growth may weaken. We now foresee GDP growing almost 3% for full-year 2018, before slackening to about 2½% next year.