Dutch macro perspectives – A strong finish to a year of recovery
The Dutch economy showed solid growth as GDP expanded by 0.4% q/q in the final quarter of last year - This was despite subdued growth in the eurozone – revised up today to 0.1% q/q – and a contraction in main trading partner Germany (-0.2 q/q). As expected, growth was broad-based across the components. The solid fourth quarter follows the very strong second (+1.1% q/q) and third quarters (0.8% q/q). As a result, annual growth in 2024 is now 0.9%, up from 0.1% in 2023. The growth figures indicate that the Dutch economy has effectively rebounded from the stagnation caused by the energy crisis in 2022 and 2023.
Strong net exports due to lower gas imports
Net exports (0.8 p/p) contributed strongly to Q4 GDP growth. Supporting the trade balance was a strong decline in imports, with a small expansion in exports. Specifically, lower gas imports drove the decline in imports. This was driven by high energy prices and supply disruptions in European gas markets. For overall GDP growth, the positive impact from the trade balance was offset by a strong drawdown of domestic gas inventories due to the colder winter. Finally, while we do see anecdotal evidence of frontloading US tariffs, it is not enough to move the macro figures, certainly not in Q4 already.
Household spending and investments strong
Other subcomponents developed in line with expectations. Rising real incomes supported an uptick in goods consumption by households, especially in cars. Upcoming tax changes led to a bump in investment in transport, especially cargo vans.
Labour market tightened again after all
The labour market remained robust in the fourth quarter, with unemployment holding steady at 3.7% and an increase in job vacancies. Labor demand in the Dutch economy continues to be very high, partly due to the government's expansive fiscal policies. The primary constraint for the business sector remains the shortage of labour.
Tariffs expected to weigh on the outlook
Looking ahead, the 2024 growth profile is expected to extend into 2025, with domestic strength and external risks that cloud the outlook. High wage growth, decreasing inflation, and a tight labour market are expected to boost real income and spending throughout 2025. Additionally, the Dutch government's expansive fiscal stance, which differs from other eurozone countries, is likely to contribute to growth. However, external risks are becoming more pronounced, particularly due to potential tariffs from the US administration, which are expected to dampen growth from the second half of 2025 onward. Furthermore, the structural underperformance of Germany, a key trading partner, also poses challenges. We are currently revising our growth forecasts, which we will publish in our upcoming Global Monthly publication.