Recession hits the Netherlands

Recession hits the Netherlands

The Netherlands has fallen into recession again, according to the latest economic figures from Statistics Netherlands.

The Dutch saw their economy shrink by 0.7% in the fourth quarter, the second consecutive quarter of economic contraction.

The fourth-quarter contraction is largely due to the further decline of household spending. The drop in government consumption and exports of Dutch products also contributed.

According to the first, provisional estimate conducted by Statistics Netherlands, the Dutch economy declined by 0.7 percent in the fourth quarter of 2011 relative to the same period in 2010. The average economic growth rate over 2011 is 1.2 percent. The downturn in the fourth quarter is predominantly due to the ongoing decline in household and government consumption and exports of Dutch products. Investments improved , although less rapidly than in previous quarters.

Also decline relative to third quarter
In the fourth quarter, the Dutch economy also shrank by 0.7 percent from the preceding quarter. The decline over the third quarter was 0.4 percent. According to the definition, the Dutch economy is currently in recession.

Household consumption down
Household consumption was 1.8 percent down in the fourth quarter from one year previously. Natural gas consumption was substantially lower due to the mild weather conditions. Furniture and car sales also dwindled.
Government consumption fell by 0.2 percent in the fourth quarter. In the third quarter, government consumption was still at the same level as one year previously. The decrease in the fourth quarter is partly due to reduced employment in public administration and other cost cuts. The costs of health care have risen.

Reduced demand Dutch product
Exports of goods and serviceswere 0.4 percent higher in the fourth quarter than in the fourth quarter of 2010. The growth of exports was still in the double digits in 2010, but slowed down in 2011. Exports of products manufactured in the Netherlands fell by no less than 2.3 percent in the fourth quarter. Re-exports, on the other hand, grew by 1.4 percent.

Growth investments slows down
Investments were 2.9 percent up in the fourth quarter, but growth slowed down. Companies purchased more cars, lorries and vans in the fourth quarter as compared to one year previously, but investments in machinery, installations and civil engineering works came to a halt.

Manufacturing output shrinking
The output level of mineral extraction was 15 percent down in the fourth quarter on the fourth quarter of 2010 due to the reduced demand for natural gas. Manufacturing output dropped by 0.8 percent versus a growth by over 3 percent in the third quarter. The mild weather conditions were favourable for the construction sector. Yet, construction output improved by no more than 0.8 percent.

Modest employment growth
The number of jobs of employees was 31 thousand up in the fourth quarter from the same period in 2010. The sectors trade, transport, hotels and restaurants, business services and health care mainly accounted for the employment growth. Employment decreased by 14 thousand in the public sector. Overall employment rose by 19 thousand relative to the previous quarter. On average, employment grew by 36 thousand jobs throughout 2011 compared to 2010, but the number of employee jobs was still 66 thousand below the 2008 level.

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