Dutch economy grows 1.3 percent in second quarter 2005

Dutch economy improved in the second quarter of 2005. Gross domestic product (GDP) was 1.3 percent higher than one year previously. After correction for working day and seasonal effects, the volume of GDP was 1.2 percent higher than in the first quarter of 2005. Quarter-on-quarter growth is remarkably high and follows a relatively robust decrease in the first quarter of this year.

GDP growth was due to greater exports and more investment. The volume of exports of goods and services was 5.5 percent higher in the second quarter of 2005 than in the same quarter of 2004. It means that the volume growth rate of exports almost equals that of the first quarter. Exports of goods manufactured in the Netherlands, however, distinctly improved but the growth of re-exports is still higher than the growth of exports of goods manufactured in the Netherlands. Re-exported goods, for example goods made in China, are distributed via the Netherlands after being subjected to slight processing. Growth of imports in the second quarter was 4.4 percent. Re-exports were almost entirely accountable for the increase.

Fixed capital formation in the second quarter of 2005 was 2.6 percent higher than in the same quarter last year, mainly because more money was invested in non-residential buildings and residential property. The increase is partly due to an increased amount of hours worked per employee. Investment in company cars and especially computers went up considerably.

In the second quarter of 2005 household spending, adjusted for price changes, was 0.1 percent up on twelve months ago. This follows a substantial dip in the first quarter.

In the second quarter of 2005 Dutch consumers spent more on services (such as banking and telecommunication services). Households spent less on durable consumer goods than in the same quarter of 2004, but the decrease was not as large as in previous quarters.

The volume of government consumption in the second quarter was also 0.4 percent lower than in the second quarter of 2004. Government spending on public administration was reduced, but real expenditure by the government on care and welfare went up, though appreciably less than in recent years.

Disposable for final expenditure and final expenditure (volume)