Dutch GDP up substantially in 2Q17 - ING

Dutch GDP for 2Q17 has come in much stronger than expected as he economy expanded by 1.5% QoQ (6.2% annualized), a level achieved only twice since 2000, notes Dimitry Fleming, Senior Economist at ING.

Key Quotes

“A surge in exports, most notably domestically-produced goods (+2.3% QoQ), was the main growth driver. Details lack, but exports of machines and transportation vehicles appear to have done very well. Domestic demand contributed strongly positively too and expanded for the 13th quarter in a row. Private consumption rose a hefty 0.9% QoQ, fuelled by the strongest job growth since 2008. Investment increased by 0.8%.”

“Today’s exceptional strong growth number has induced the CPB to revise its 2017 growth forecast to 3.3% (from 2.4%). This would be the first 3%-plus growth number since 2007.The forecast for 2018 has been revised to 2.5% from 2.0% previously. The longer-term outlook (2018-21) is also very optimistic with average annual growth of 1.8% pencilled in.”

“The CPB’s economic outlook is input for the 2018 fiscal budget (to be announced in September). It’s also the basis for the coalition agreement of the new government (for which negotiations are still in process). Government finances appear very healthy. The CPB now forecasts a surplus of 0.9% of GDP in 2018, rising to 1.6% (assuming unchanged policy) in 2021. Government debt – already below 60% of GDP - is expected to drop to 45%.”

“All an all, government finances continue to improve and employment is picking up rapidly. After two years of above-average growth, the economy is still going strong.”