That neat Dutch economy

The Dutch economy grew by 0,4% (quarter-on-quarter) in the fourth quarter. This brings growth for the year to 0,9%. The latter is meagre, but clearly better than in 2023 when only 0,1% growth was recorded.

For the loyal reader: due to time constraints, this is a short commentary without graphs.

In the fourth quarter, business investments and foreign trade in particular contributed to growth. Some nuance is appropriate here. Business investments were driven primarily by the purchase of vans. Companies brought forward the purchase of petrol and diesel vehicles in particular because of the tax increases that came into effect on 1 January.

Foreign trade contributed to growth mainly through lower gas imports. The downside of the latter was that gas reserves were being used up, which in turn contributed negatively to growth.

In 2024, government consumption in particular grew strongly: 3,3%. This was partly due to higher healthcare expenditure. Of course, you would rather see strong contributions from the private sector. Private consumption rose by 1,1%. That sounds reasonable, but I was a bit disappointed because purchasing power clearly increased faster.

Moderately positive about 2025
Looking ahead, we can be moderately positive about 2025. Admittedly, companies will buy fewer vehicles because they did that last year. But because consumption growth has lagged behind the improvement in purchasing power and purchasing power will increase again this year, I expect that the consumer will spend a bit more this year.

We can also be optimistic about 2024 because of the growth pattern throughout 2025. In the first quarter of 2024, our economy still shrank. However, in the last three quarters there was certainly reasonable growth. This has created a considerable amount of 'spillover'. This means that GDP in the fourth quarter was approximately 1% higher than the average for the year. Even if GDP remains unchanged in all quarters of 2025 compared to the fourth quarter of 2024, this still results in a growth percentage of 1% for the year as a whole. However, we hope that our economy will also grow somewhat in the course of the year. In December, DNB predicted growth of 1,5% for 2025. In my opinion, the chance that we will exceed that is considerable. That is favourable for government finances.

US inflation disappoints badly
US inflation disappointed in January. Month-on-month prices rose 0,5%. The year-on-year increase accelerated from 2,9% to 3,0% while core inflation accelerated from 3,2% to 3,3%. The disappointments were fairly widespread.

The January inflation figure could surprise as many companies adjust their prices in January. But for now, the figure should reinforce the Fed's belief that rate cuts are not appropriate for the time being.

Hans de Jong

Han de Jong is a former chief economist at ABN Amro and now a resident economist at BNR Nieuwsradio, among others. His comments can also be found on Crystalcleareconomics.nl

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