For the first time since 2003, Dutch economic growth was negative again in the first quarter of 2005. According to the second estimate of Statistics Netherlands’ quarterly national accounts, the gross domestic product (GDP) was 0.5 percent smaller than in the same quarter last year. This is 0.2 of a percent point lower than in the first estimate, published in May. The first quarter of 2005 had one working day fewer than the same quarter in 2004, which might have had an effect on growth.
The slight fall in GDP can be accounted for by falling domestic expenditure and the smaller growth of exports. Households bought less and investments, too, were down. The increase in exports in the first quarter was only half the average increase in 2004.
The national accounts have undergone a revision, and new definitions and sources have been introduced. Furthermore, the usual annual adjustment of figures on previous years has been completed as more and better information has become available. The new information puts economic growth lower for 2002 and higher for 2003 and 2004 than previously published figures suggested.
Slight downward adjustment for economic growth
The decrease of GDP in the first quarter of 2005 was 0.2 of a percent point larger than in the first estimate published on 12 May. Then, Statistics Netherlands had calculated a fall in GDP of 0.3 percent on twelve months previously. Both household and government consumption were lower than previously estimated. Product stocks were also lower. Exports, on the other hand, grew by more than previously estimated. On the production side: the production of non-commercial services (care and education) was smaller.
Quarter-on quarter growth very negative
After correction for working day and seasonal effects, the volume of GDP was 0.8 percent lower in the first quarter of 2005 than in the fourth quarter of 2004. In the first estimate published in May, this decrease was 0.1 percent.
This is the first time in six quarters that quarter-on-quarter growth is negative again. The effect of the one working day fewer in the first quarter of 2005 than in 2004 is corrected for in this comparison.
Export growth nearly halved
The volume of exports of goods and services was 5.0 percent larger in the first quarter of 2005 than in the same quarter in 2004. In 2004 exports grew by an average 8.5 percent.
The growth of exports in the first quarter can nearly all be accounted for by the re-exports of products made elsewhere. These are distributed via the Netherlands, after slight processing here. Exports of goods and services produced in the Netherlands rose only modestly. Imports rose by 4.5 percent; here, too, the growth was largely caused by the increase in re-exports.
Households spend less
After corrections for price changes, households spent 1.6 percent less in the first quarter of 2005 than in the first quarter of 2004. Household consumption stabilised last year, following a 0.7 percent drop in 2003. Dutch consumers spent less on durable goods in particular in the first quarter of 2005, such as cars, furniture and household appliances. They also spent slightly less on food, drink and tobacco, and substantially less on foreign holidays.
Construction dip pushed investment down
Fixed capital formation was 1.6 percent smaller in the first quarter of 2005 than twelve months previously. The fall is accounted for by substantially lower investment in non-residential buildings and infrastructure. But less was also invested in dwellings as well. The decrease in investment in land development is connected with the fewer hours worked in the construction sector. Investment in company cars and especially computers was up substantially.
Production down for goods producers and government
From the point of view of production, the economic contraction is the net result of a modest increase in the production of commercial services, a hefty decrease in the production of goods and a slight increase in the production of non-commercial services.
In the manufacturing industry, production in the chemical and electrical engineering sectors was down substantially. Construction and mineral extraction also produced considerably less. Commercial services showed a slight increase: the wholesale and transport sectors benefited from the Netherlands’ role as a distributor. Temp agencies were able to take advantage of the reservations of employers about recruiting on a permanent basis. Lower spending by government resulted in lower production levels for non-commercial services.
Economic growth lower in 2002, higher in 2003 and 2004
The Dutch national accounts have undergone a revision for the period 2001 to 2004. Statistics Netherlands has implemented new concepts and measurement methods, and improved the source statistics. In addition to this revision, the annual adjustment of the yearly figures has been completed. There are thus two sources for the differences between yearly figures before and after the revision. Economic growth came to 0.1, -0.1 and 1.7 percent respectively for 2002, 2003 and 2004. The pre-revision figures were 0.6, -0.9 and 1.4 percent.
PDF contains complete press release, including tables and graphics.