Dutch GDP growth contracts, but underlying developments seem positive  (2024)

Dutch GDP growth contracts, but underlying developments seem positive

The Dutch economy contractedby 0.1 % in the first quarter of 2024thanks to an acceleration in the reduction of inventories, contracting exports and a negative statistical discrepancy. While this seems worse than expected, most expenditures performed better than we’d thought, and that indicates solid underlying demand growth

Dutch GDP growth contracts, but underlying developments seem positive (1)

Demand more solid than the headline figure suggests

Although the GDP figures came in weaker than expected, underlying developments seem better than we'd first thought. A statistical discrepancy is the main cause of the contraction. Without thateffect of -0.4% being knocked off GDP, the growthdevelopment would have been positive.

There was also a temporary negative development of a 0.7% GDP reduction in inventories, draggingdown the GDP rate by 0.1 percentage points; it was an acceleration of a substation development in the final quarter of last year. Household consumption, investments, and exports outperformed our forecasts, meaning demand was stronger than expected.

Public and private consumption were significant growth engines

Yes, exports declined (by -0.1%, adjusted for seasonal effects) and that is a real demand factor that held back the economy. But the expected contraction was, indeed, mild.The net contribution of the trade balance (exports minus imports) to GDP was mildly negative (-0.1% GDP), as imports stagnated (0.0% QoQ) while exports contracted.

Household consumption made the biggest positive contribution to growth, growing 0.7% QoQ. Consumer confidence and purchasing power are on the rise, and the early timing of Easter also contributed positively to household developments. However, unusually high temperatures held back household developments a little, suppressing energy consumption.

Government consumption expanded by a solid 0.6% QoQ, similar to the previous quarter and very much as expected. The number of hours worked particularlyincreased in public administration and health care.

Investment expanded mildly (0.4% QoQ), to our surprise. This was mainly caused by un upswing in the purchaseof transportation equipmentand, to a lesser extent, machinery, software & databases as well as higher real estate transaction costs. All other types of capital expenditurefell, the most notably in computer equipment and the construction of all types of real estate.

A contraction in manufacturing and construction

Among Dutch industries, culture, recreation & sports, agriculture & fishery, construction and, notably, manufacturing contracted. Manufacturing had its largest contraction (-3.8% QoQ) in value-added since the second quarter of 2020. And within manufacturing subsectors, Looking at production figures for subsectors within manufacturing, transport equipment, pharma and basic metals fell back. This big industrial contraction is not expected to last, as forward-lookingmanufacturing indicatorshave lately been improving.

Mining and quarrying saw the biggest decline in value-added, due to lower gas demand caused by higher temperatures and the closure of the Groningen gas field. The energy supply sector, water & waste, trade, transport & storage, real estate, business services and the semi-public sector (government, education & health) showed an expansion of value-added. Financial services and ICT stagnated.

Growth still expected for 2024

The outcome for the first quarter of this year was worse than our forecast of+0.2% QoQ, but that forecast would have been almost spot on without the large statistical discrepancy. The direction of underlying expenditure developments was as expected, except for the positive investment surprise. Barring any further surprisesand with the possibility of future revisions of statistical discrepancies, our most recent annual GDP growth forecasts for 2024, which stand at0.7%, will not need many tweaks in next month’s forecasting round. This means an outlook of growth but somewhat below the potential rate.

While we still expect private investment to remain a drag on growth in the future, we forecast trade developments to improve. This should cause the return of Dutch export growth in the current quarter. At the same time, household consumption is expected to continue to be oneof the main drivers for GDP, as nominal income developments are expected to outpace inflation by a few percentage points. Also, public consumption is likely to remain one of the main contributions to the expansion.

An important domestic uncertainty in the near term is political. No new government has been formed since the November 2023 parliamentary elections, even though talks might be in the final stages. In fact, political leaders of the four parties involved in the negotiations signalled much optimism yesterday, so an agreement might be presented later today. Should policy uncertaintydrag on for much longer, it may cause more hesitance in investment behaviour, as the policy path on some pressing issues, such as nitrogen emissions and the future of agriculture, may remain opaque.

That being said, based on the manifestos of the negotiating parties, it seems likely that public expenditure will continue to rise in the coming years, albeit possibly by a bit less than set out by the previous government. As such,public expendituremay be one of the driving forces for Dutch GDP growth this year and beyond.

Dutch GDP growth contracts, but underlying developments seem positive  (2024)


What contributes most to Dutch GDP? ›

This statistic shows the distribution of the gross domestic product (GDP) across economic sectors in the Netherlands from 2012 to 2022. In 2022, agriculture contributed around 1.5 percent to the GDP of the Netherlands, 19.51 percent came from the industry and 68.68 percent from the service sector.

Why is the Netherlands' GDP so high? ›

75% of agricultural produce is exported from the Netherlands. Chemicals: The Dutch economy benefits greatly from the fact that the world's largest chemical companies are based in Holland. High-tech goods: The Netherlands is one of Europe's largest supplier. They are aimed at both the industrial and the consumer market.

What is the GDP growth forecast for the Netherlands? ›

The Netherlands' GDP for Q3 and Q4 of 2023 has been revised upwards by 0.1 percentage points, reaching -0.2% and 0.4% QOQ, respectively. Annual GDP growth for 2023 remains unchanged at 0.1%.

What is the strength of the Dutch economy? ›

It has the world's 11th highest per capita GDP (nominal) and the 13th highest per capita GDP (PPP) as of 2023 making it one of the highest earning nations in the world.

What made the Netherlands a thriving economy? ›

Dutch prosperity was built not only upon the “mother trades”—to the Baltic and to France and the Iberian lands—but also upon the overseas trades with Africa, Asia, and America.

Why are the Dutch so successful? ›

Excellent public transport and infrastructure make commuting easy. Business goes better and faster when goods are transported easily and quickly. Dutch transport is among the best in the world. The port of Rotterdam has been an important place for hundreds of years.

What is the main source of economy in the Netherlands? ›

The Netherlands has a market economy, but the state traditionally has been a significant participant in such fields as transportation, resource extraction, and heavy industry. The government also employs a substantial percentage of the total labour force and effects investment policy.

How did Netherlands get so rich? ›

Taking advantage of a favorable agricultural base, the Dutch achieved success in the fishing industry and the Baltic and North Sea carrying trade during the fifteenth and sixteenth centuries before establishing a far-flung maritime empire in the seventeenth century.

What is causing Netherlands inflation? ›

After a record high of 11.6% in 2022, inflation fell to 4.1% in 2023. We expect a further drop to 2.9% in 2024, hitting closer to the 2% target at 2.2% by 2025. The main causes are lower energy prices and central bank interest rate hikes.

What is the future of the Netherlands economy? ›

The latest macroeconomic forecast for Netherlands. The Dutch economy slowed down considerably in 2023 as inflation weighed on private consumption and the weak external environment held back exports. In 2024, growth is forecast to pick up to 0.8%.

What is the Netherlands famous for? ›

Let us find out in detail what is the Netherlands famous for.
  • Tulips. One of the popular symbols of the Netherlands is the tulip flower. ...
  • Windmills. Another thing the Netherlands is famous for is its windmills. ...
  • Delftware Ceramics. The Netherlands is popular for its blue and white delftware ceramics items. ...
  • Beautiful Canals.
Feb 21, 2024

Is the Netherlands in a recession? ›

The Dutch economy expanded in the fourth quarter of 2023, ending the mild recession that hit the country in 2023 and led to a GDP fall of 1.1% from Q1 to Q3 2023.

What is the Dutch economic problem? ›

In economics, Dutch disease is the apparent causal relationship between the increase in the economic development of a specific sector (for example natural resources) and a decline in other sectors (like the manufacturing sector or agriculture).

Is the Netherlands richer than Germany? ›

Although the Netherlands is a small nation, it also has a robust economy, with a focus on international trade, finance, agriculture and high-tech industries. As of 2021, the gross average annual salary in Germany was 43,700 euros per year vs 51,000 euros per annum in the Netherlands.

Are Dutch people efficient? ›

Dutch people are also very efficient with their work. One example of this is that they do not take prolonged lunches like their South European counterparts.

How did the Dutch get so rich? ›

Taking advantage of a favorable agricultural base, the Dutch achieved success in the fishing industry and the Baltic and North Sea carrying trade during the fifteenth and sixteenth centuries before establishing a far-flung maritime empire in the seventeenth century.

What are 2 of the Netherlands largest economic industries? ›

Key Industries
  • Agrifood. Learn more.
  • IT & Tech. Learn more.
  • Chemicals. Learn more.
  • High Tech Systems. Learn more.
  • Creative. Learn more.
  • Energy. Learn more.
  • Fintech. Learn more.
  • Maritime and Water Technology. Learn more.

What is the greatest contributor to GDP? ›

Service-based industries, including professional and business services, real estate, finance, and health care, make up the bulk (70%) of U.S. GDP. In comparison, goods-producing industries like agriculture, manufacturing, mining, and construction play a smaller role.


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