In the third quarter the Dutch economy again grew 0.4%, a bit more than expected and also more than average growth in the eurozone.
Growth again driven by domestic spending
Gross domestic product (GDP) expanded in the third quarter by a provisional 0.4% relative to the preceding quarter (qoq). That was about the same increase as in the previous three quarters. This growth was attributable to domestic spending, while foreign trade made no contribution.
Domestic spending again presented a mixed picture. On the one hand, private consumption growth decelerated sharply (qoq), while investments even contracted very slightly. This shrinkage was mainly due to the lower investments in means of transport, while investments in housing stagnated. In the two preceding quarters, by contrast, total investments had advanced powerfully. On the other hand, we saw a stronger rise in government consumption, as well as a larger increase in inventories than in the previous quarter.
Zero growth contribution from net exports
Imports and exports both showed a further increase (qoq), but exports grew less than in the second quarter and also less than imports. Imports actually rose fractionally more than in the spring. The upshot was that net exports (exports less imports) made no contribution to GDP growth – a stark contrast with the preceding quarter when GDP growth was largely driven by net exports.
Growth likely to decelerate
We doubt whether the economy can sustain this growth rate in the coming quarters. Despite a slight uplift in October, the sentiment indicators at home and abroad point to a weakening of economic growth. Moreover, the current nitrogen crisis in the Netherlands will probably dampen growth in the coming years. A lot remains unclear, which makes it difficult to express the impacts in figures at this stage. However, we now expect construction output to contract next year, as opposed to the further increase that we anticipated until recently. Partly as a result of this, we see GDP growth falling below 1% next year. Our GDP growth forecast for this year is 1.6% to 1.7%.