Dutch economy on track for another year of strong growth - ING

Dimitry Fleming, Senior Economist at ING, suggests that despite financial market turmoil and sliding consumer confidence, the Dutch economy got off to a solid start in 2016 as the Dutch GDP expanded 0.5% QoQ.

Key Quotes

“The details of the report show a broad-based recovery. Household consumption rose 0.4%QoQ, government spending 0.5%, investment 0.4% and net exports added 0.1%-points. So, it’s clear that the fall in consumer sentiment in Q1 didn’t feed through into weaker spending. Rising disposable income – the result of tax cuts and wage growth – helped offsetting the negative effects from market turmoil on confidence. Sector-wise, there were no pockets of weakness. All sectors contributed positively to GDP, with construction adding the most.

While today’s GDP data look solid, the employment numbers do not. In Q1, the number of jobs declined for the first time in two years. Construction, industry, job agencies and health all registered a fall. For now, we see this as a temporary dip after several quarters of strong growth. Furthermore, the number of vacancies rose further in Q1.

All in all, today’s report supports our optimistic growth outlook for this year. We may have to trim our GDP forecast for 2016 a bit (currently: 2.3%), but it remains above-consensus (1.5%).”