Preliminary estimates by Statistics Netherlands put Dutch economic growth at 0.9 percent in 2005. This is nearly half the growth of 1.7 percent in 2004, but well above the zero increase in 2002-2003. Again, exports led the modest economic recovery last year. In addition consumption and fixed capital formation each contributed a little. The number of jobs was 0.4 percent down on 2004, but the decrease was much smaller than in 2004.
Economic growth 1.6 percent in fourth quarter
In the fourth quarter of 2005 the gross domestic product, GDP, was 1.6 percent higher than in the same quarter twelve months previously. This was the highest quarter-on-quarter growth in 2005. The growth in the fourth quarter was caused by a upturn in consumption expenditure and an increasing trade surplus. The number of jobs in the fourth quarter was 0.2 percent higher than twelve months previously. This was the first time in nearly three years that jobs were up on the same period in the previous year.
High quarter-on-quarter growth
After correction for seasonal and working day effects, the volume of GDP was 1.0 percent larger in the fourth quarter than in the third quarter of 2005. The fourth quarter had two working days fewer than the fourth quarter of 2004. The quarter-on-quarter growth was much higher than the average of the preceding four quarters.
Slower growth for exports
The volume of exports of goods and services was 4.8 percent higher in 2005 than in 2004. This is a lower growth rate than in 2004. The increase in exports was again largely based on re-exports of goods produced outside the Netherlands; goods produced in China, Taiwan or the US, for example, are distributed through the Netherlands after only little further processing. The increase in exports of products manufactured in the Netherlands was limited in comparison. In the fourth quarter the growth of exports was 3.7 percent.
Imports increased by 4.4 percent in 2005, slightly less than exports. In the fourth quarter growth of imports lagged quite a way behind that of exports.
Small growth for household consumption
The volume of consumption by households wass 0.3 percent higher in 2005 than in 2004. After a fall at the beginning of 2005, consumption by households clearly picked up again in the second half of the year. The improvement was most noticeable in spending on durable consumer goods. After years of decrease this rose strongly in the last quarter of 2005 in particular, by more than 5 percent.
Government consumption up slightly
The volume of government consumption was 0.7 percent higher last year than in 2004. Here, too, growth was concentrated in the second half of the year. This was partly caused by extra spending for the preparations of changes in resulting from government measures. Real spending on care rose in 2005.
Slight recovery continues for fixed capital formation
Fixed capital formation was 2.0 percent higher in 2005 than in 2004. This continues the slight recovery of investment activity. In 2005 a lot more was invested in dwellings, company cars and especially in computers. On the other hand, less was spent on machines, company buildings and goods vehicles than in 2004.
High production for construction and commercial services
From the point of view of production, construction and especially commercial services were the leaders for economic growth in 2005. Construction benefited from the increase in residential construction. In commercial services the growth was mainly in wholesale, which is involved in the re-exports chain, and the temp agency branch. Production of banks and insurance companies, and business services such as computer services bureaux and advertising agencies also rose. The increase in care also pushed up production slightly in non-commercial services.
Manufacturing produced slightly less than in 2004, and thus lags noticeably behind previous periods of economic recovery. This is mainly the result of the decrease in the engineering and transport equipment industry. Production of natural gas was down substantially, and agriculture, too, produced less.
After the strong decrease in employment in 2004, the fall in the number of jobs of employees in 2005 was only 0.4 percent. In the course of 2005, employment improved clearly and the number of jobs even rose slightly. In the fourth quarter of 2005 there were 18 thousand more jobs than in the fourth quarter of 2004. The turnaround was caused by the recovery of business employment, and mainly by the increase in temporary jobs.
Labour productivity, the volume of production per working year, was about 1.5 percent higher in 2005 than in 2004. This increase was smaller than in 2004, the first year of economic recovery. It is an indication that the continuing economic recovery is making itself increasingly felt on the labour market.