The Dutch economy showed strong growth in the third quarter of 2023, even outpacing the second quarter’s performance. According to the latest quarter survey data, the economy grew by 0.4% q/q. This is a big jump from the 0.3% growth rate revised down for the second quarter. This substantial upward revision is a testament to an incredibly strong economic environment. Even amidst an investment slowdown and higher than typical inventory levels, households and the government are both consuming more.
That performance of 5.6% acceleration on real economic activity was largely helped along by robust household consumption, contributing a notable half-point acceleration to household consumption, 0.3%. This increase is a sure sign of increasing confidence among consumers, which adds a bit of golden glow to economic performance overall. Government consumption had a significant effect, growing by 1.1% and adding a shockingly robust positive contribution to economic growth.
Yet, despite all of these good trends the broader economy began experiencing very strong headwinds. Inventories saw a large drop, which gave a mechanical drag to this quarter’s growth numbers. In addition, Dutch investment went south, dropping by 1.6%, which pulled down the total growth headline figure.
Net exports have emerged as an important determinant of economic success. They contributed 0.5 percentage points to growth. That’s on a total merchandise trade basis, which grew by a remarkable 1.7% during the third quarter. Even better, exports increased 0.8%, a sign of strong worldwide demand for Dutch goods. Service exports were hit particularly hard, down 1.1%. Goods imports jumped 0.9%, a sign of continued robust demand for foreign-made products.
Analysts do expect a deceleration in that growth for the remainder of the year. Other economic forces have begun to weigh on the debate. Overall, forecasts point to a modest continuation of the return toward a more usual growth trajectory though not before 2026.