Stepped-up natural gas output boosts economic growth

17/05/2005 14:00

In 2004 stepped-up natural gas output contributed 0.3 percentage points to economic growth. The economy grew by 1.4 percent in 2004.

Domestic use and exports of natural gas, 1960-2004

Increasing demand for natural gas

Foreign demand for natural gas grew strongly and this prompted the Netherlands to step up production in 2004. The output volume of extracted minerals rose by nearly 12 percent. Stepped-up natural gas output contributed 0.3 percentage points to economic growth. Exports of natural gas reached the highest level since 1980. Dutch exports of natural gas were stimulated by a shortage on the European market. Imports of gas into the Netherlands dropped sharply and as a result, the domestic demand for natural gas also increased. The growing demand on the European and domestic markets had a positive effect on economic growth.

Contribution to economic growth by sector, 2004

Higher production in agriculture 

Agricultural production rose by 1.9 percent in 2004 compared to the previous year. Dutch soil produced bumper crops of potatoes and other agricultural and horticultural products. Poultry farming picked up after the avian flu epidemic of 2003. Output volume in cattle farming (milk and cattle), on the other hand, dwindled compared to 2003. 

Construction output slightly recovers

Construction output appears to have recovered slightly from the slump in 2003. In 2004 the number of newly-built houses totalled 65 thousand, 10 percent above the previous year’s output. In 2003, however, the construction of new dwellings reached a historic low. Recovery in the construction sector was not realised across the board. Investments in non-residential buildings fell by 3 percent.

Manufacturing industry bounces back

Manufacturing output rose by 0.9 percent compared to 2003. Output increased for the first time in three years. Manufacture of metal and metal products witnessed a robust growth in 2004. Manufacturing output in the sector chemicals and chemical products, one of the most vital sectors of Dutch manufacturing industry, declined in the latter half of the year.

Output and income, 2004

Income developments

Incomes of producers of goods vary considerably. Construction and extraction of minerals benefited from improvement of the exchange rate, a more favourable relation between selling and purchase prices. Labour costs rose at a lower rate than the value of output. The sector construction had a substantially higher income. Value addedd is higher in this sector, realised with a labour volume decline of nearly 5 percent.

Lower incomes for farmers

Despite the output growth in agriculture, farmers’ incomes declined in 2004. Average selling prices of agricultural products remained virtually stable, but purchase prices increased by more than 3 percent on average.

Nico van Stokrom and Ron van der Wal