GDP growth rate 0.5 in Q1 2018

15/05/2018 15:00
© Hollandse Hoogte
According to the first estimate conducted by Statistics Netherlands (CBS), which is based on currently available data, gross domestic product (GDP) grew by 0.5 percent in Q1 2018 relative to Q4 2017. This is due to increased household consumption and investments in fixed assets. GDP rose slightly less sharply than in Q4 2017, when a growth rate of 0.7 percent was achieved.

The rest of the news release deals with economic growth compared to Q1 2017.

GDP 2.8 percent up on Q1 2017

According to the first estimate, GDP was 2.8 percent up on Q1 2017. Growth was mainly due to higher domestic expenditure: household consumption and investments in fixed assets grew substantially. Exports grew as well, but imports grew even faster. For the first time in two years, net exports made a negative contribution to the growth of GDP as a result.

Q1 2018 had one working day less than Q1 2017. If GDP is adjusted for this effect, the GDP growth rate is 3.0 percent.

Consumer spending up

Year-on-year, consumer spending was over 3 percent higher in Q1 2018. This is the highest growth rate in more than 17 years. For 16 quarters in a row, consumer spending has risen relative to one year previously.

In Q1 2018, consumers mainly spent more on passenger cars, electrical appliances, clothing and home furnishing articles. Natural gas consumption also increased. Q1 2018 had colder weather conditions compared to Q1 2017. Dutch consumers also spent more on services, e.g. in hotels and restaurants. Spending on services accounts for more than half of total domestic consumer spending.

Increased consumption is consistent with employment growth - (also reported by CBS today), the drop in unemployment and further recovery of the housing market. Consumer confidence has been high since the end of 2016.

Higher investments in residential property and passenger cars

Investments in fixed assets were over 6 percent higher than one year previously. Again, Q1 2018 mainly saw an increase in investments in residential property and transport vehicles. Entrepreneurs also invested more in machinery. In February 2018, producer confidence reached the highest level of all time.

Mainly more exports of machinery and chemical products

Exports of goods and services grew by nearly 4 percent in Q1 2018. One quarter previously, exports grew almost twice as fast. Dutch companies exported mainly more machinery and chemical products. Exports of transport equipment rose more than average. Re-exports (i.e. exports of imported products) grew at a slightly faster pace than exports of domestic products.

Imports of goods and services grew faster than exports, by nearly 5 percent. As a result, the balance of trade (net exports) made a negative contribution to economic growth for the first time in two years.

Construction and business services show strongest growth

The construction sector realised the strongest output growth, in particular in the construction of new dwellings. The sector business services also showed substantial growth compared to Q1 2017. As in the previous quarters, the sector temp agencies had higher output in particular. Labour market figures published by CBS today corroborate this development: the number of temp jobs continued to grow.

The manufacturing industry also recorded output growth relative to one year previously. Q1 2018 saw a substantial increase in the production of machinery, transport equipment and chemical products. The mining and quarrying sector saw the largest decline.

First estimate

The first estimate is conducted 45 days after the end of a quarter and is based on information available at that moment. CBS provides a first picture of the state of the Dutch economy. After the first estimate, new data are continually pouring in, which are used to make new calculations. The second estimate on economic growth will be released on Friday 22 June. In absolute terms, the adjustment of the second estimate relative to the first estimate averaged 0.1 percentage points over the past half decade, with the two extremes ranging between - 0.3 and + 0.3 percentage points.

With each new estimate, CBS also recalculates the new seasonally adjusted figures of previously published quarters. The growth figure for Q4 2017 has been adjusted from 0.8 to 0.7 percent. This recalculation has not resulted in an adjustment of the other three quarters.

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