Dutch economy unexpectedly falls

13 Aug, 2004

The Dutch economy unexpectedly shrank in the second quarter, contracting 0.2 percent from the first three months, but the statistics office said a one-off factor was to blame which had been underestimated by analysts.
Economists had expected quarterly GDP growth to slow because the first quarter was inflated by a surge in construction activity due to unusually warm weather.
But they had still predicted a preliminary 0.4 percent quarter-on-quarter rise after the 0.6 percent gain in the first quarter (revised down from 0.7 percent).
In year-on-year terms, second quarter growth firmed marginally to 1.0 percent after 0.9 percent in the previous quarter.
The Dutch GDP figures, marking the first quarter of contraction for a year, compare unfavourably to growth rates in Germany and France, which reported preliminary increases for the period of 0.5 percent and 0.8 percent respectively.
But analysts said Dutch GDP can be volatile and forecast that Thursday's estimate would probably be revised up.
They also said the result did not cast doubt on the recovery of the Dutch economy, which is emerging from last year's full-year recession, the first since 1982.
"After France and Germany, you might think 'what's going on with that country?' But it is (in part) the problem with statistics for a small country," said Fortis Bank economist Aline Schuiling. "GDP can be very volatile," she added.
The Dutch government's forecaster, the Central Planning Bureau, expects the economy to grow 1.25 percent in 2004, and this week raised its 2005 forecast by a quarter percentage point to 1.5 percent.
Rabobank economist Martin van Oijen said weak manufacturing output, which was flat year-on-year in June and shrank 0.1 percent on the month, together with stagnating private consumption, had already pointed to a weak second quarter GDP result.

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