The third quarter saw the Dutch economy grow by only 0.2% relative to the previous quarter (qoq). This growth was substantially lower than in Q2, although in line with average eurozone growth.
Growth slowdown triggered by lower investment
The 0.2% qoq rise in gross domestic product (GDP) was substantially lower than in Q2 (0.7% qoq), mainly owing to an unexpected drop in gross investment. Another surprising aspect was the absence of a rise in government spending, while barely any increase was recorded in the second quarter either. So while the Dutch Coalition Agreement makes provision for a considerable boost in government spending, we have so far seen little evidence of any increase materialising.
Further rise in household consumption and exports
Household consumption rose slightly faster (qoq) than in the second quarter, while exports continued to grow, albeit more slowly than in the previous quarter. As imports rose slightly faster, however, the contribution of net exports (exports minus imports) to GDP growth evaporated, compared to a positive contribution of 0.8% in the previous quarter.
Growth forecasts cut for 2018 and 2019
The disappointing Q3 growth will impact on our GDP forecasts both for this year and next year. We have just reduced our forecasts for growth in the eurozone as well. We now expect the Dutch economy to grow by 2.5% or 2.6% in 2018 (previous forecast: 2.9%), while the forecast for 2019 has been cut from 2.5% to around 2%.