Dutch economic growth fell in the first quarter of 2005 for the first time since 2003. The gross domestic product was 0.3 percent lower than in the first quarter of last year. The first quarter of 2005 had one working day fewer than the first quarter of 2004, which might have had an effect on economic growth. Employment fell again in the first quarter of 2005. However, the decrease was slightly smaller than in the four previous quarters, according to the first estimate of Statistics Netherlands quarterly national accounts.
One important cause for the slight decrease in GDP was the development in exports. The increase in exports more than halved in the first quarter. Furthermore, households spent less and investments were down. Government consumption showed a modest increase.
Quarter-on-quarter growth slightly negative
After correction for working day and seasonal effects, the volume of GDP was 0.1 percent lower than in the fourth quarter of 2004. The quarter-on-quarter comparison is corrected for the fact that the first quarter of 2005 had one working day fewer than the first quarter last year.
Export growth more than halved
The volume of exports of goods and services was 3.7 percent higher in the first quarter of 2005 than twelve months previously. This is less than half the growth rate in the first quarter of 2004.
Almost all of the increase in exports in the first quarter was accounted for by re-exports of goods produced elsewhere. These are distributed via the Netherlands after undergoing slight processing. Exports of goods and services produced in the Netherlands did not increase. Imports grew by 4.3 percent. Here, too, the increase was almost entirely caused by re-exports.
Households spend less
Households spent 1.0 percent less in the first quarter of 2005 than in the same quarter in 2004. In 2004 household consumption recovered slightly after the dip in 2003. Dutch consumers spent less on expensive durable goods such as cars, furniture and consumer electronics in particular. But – taking into account price changes - they also spent a little less on food, drink and tobacco.
Modest growth in government consumption
The volume of government consumption was 1.6 percent higher in the first quarter of 2005 than in the same quarter last year. Real expenditure by the government on care and welfare increased. One of the reasons for this is that under the new subsidies system, more spending on childcare is booked as government spending. Spending on education and public administration was almost stable.
Lower investment through lower construction activity
Fixed capital formation was 1.8 percent lower in the first quarter of 2005 than twelve months previously. The decrease was mainly the result of substantially lower investment in non-residential buildings and infrastructure, but less was also invested in residential construction projects. The decrease in investment in construction is partly related to the lower number of hours worked. More was invested in company cars and especially computers.
Lower goods production
Seen from the production point of view, the dip in the economy is the result of slight production growth for services and substantial drops in the production of goods. The chemical and electrical engineering sectors accounted for the largest decrease in production by the manufacturing industry. But the decreases in production in construction and mineral extraction were also substantial. The services sector showed slight increases. Wholesale trade and transport benefited from the thriving distribution function of the Netherlands; and temp agencies reaped the profits from the cautious attitudes of companies towards recruiting permanent staff.
Smaller decrease in employment
In the first quarter of 2005 there were 78 thousand employee jobs, 1.1 percent fewer than one year ago. The decrease in labour-years was relatively slightly larger: 1.3 percent. This is the eighth quarter in succession that the number of jobs was lower than twelve months previously, although the decrease was smaller than in the four preceding quarters.
On 20 April this year, Statistics Netherlands published revised National Accounts figures for 2001. The revision was based on adjusted definitions, estimation methods and new and revised statistics. On 30 June this year revised figures will by published for years and quarters after 2001. The figures in the present press release are based on figures from before the revision and can be compared with those for 2004 published on 31 March 2005.
PDF contains complete press release including tables and graphics.