Dutch economic growth held up well at 0.5% in the second quarter. The number was better than expected and also higher than the eurozone growth figure.
Private consumption and investments rise, government spending down
Gross domestic product (GDP) increased in the second quarter by 0.5% compared to the previous quarter (qoq) – the same growth figure as in the preceding two quarters. Total domestic investment did less well than in the previous quarter, whereas foreign trade made a strong contribution to growth.
Domestic spending displayed a mixed picture. Private consumption accelerated strongly after a somewhat meagre first quarter. Investment of companies and in housing were also on the rise again. Against this, government spending decreased. Evidently, the government is still struggling to deliver on its plans for increased spending as set out in the Coalition Agreement. Also negative was the contraction of inventories, which significantly dampened growth (after showing a plus in the first quarter).
Net exports contributed to growth
Imports and exports both advanced again (qoq). Exports accelerated relative to the first quarter and also outpaced imports. Imports showed the reverse pattern. As a result, net exports (exports less imports) made a strong contribution to GDP growth. In the first quarter, by contrast, net exports depressed growth.
But the growth outlook is deteriorating
We do not expect the economy to continue growing at this rate – mainly because of the worsening international environment. The US-China trade conflict has escalated further. This has again prompted us to slightly reduce our forecasts. For the Netherlands, we see growth working out at just under 1% next year. However, thanks to the better-than-expected figure in the second quarter, growth this year will be a bit higher than initially expected, namely just over 1½%.