The Netherlands: strong GDP growth despite lockdown

Dutch GDP expanded by 0.9% in the fourth quarter of 2021 compared to the third quarter. It came in at 2.8% higher than the pre-pandemic peak of 4Q19. The figure is better than we expected. During the fourth quarter, Covid containment measures were gradually increased, leading up to a new lockdown as of 19 December 2021. This could have suppressed the consumption of households significantly, as happened during previous lockdowns. With a -0.1% quarter-on-quarter decline, the drag of consumption of households on GDP growth was small, however.

Surprisingly, government consumption expanded in the fourth quarter of 2021 (0.7% quarter-on-quarter) despite the fact that regular healthcare services were scaled down to make room for Covid-related care.

Covid support measures for businesses, most of which were initially terminated at the end of September 2021, were reimposed for the fourth quarter and also made available for the first quarter of 2022. As a result, investment held up well. In fact, gross capital formation increased by 2.6% compared to the fourth quarter, with expenditures providing the largest contribution to GDP growth. The expansion was almost completely driven by a higher level of investment in transport equipment (32.4%). While expenditures on commercial buildings (3.7%) and intangible assets (1.1%) increased, investment in housing (-3.3%), ICT equipment (-2.8%) and machinery and other equipment (-1.9%) fell.

Export stayed flat (-0.1%), while goods export growth (0.8%) was fairly decent, despite the worldwide supply chain disruptions that were also among the main Covid-concerns of Dutch businesses. Domestically-produced goods exports (1.4%) and re-exports (1.2%) expanded at a similarly solid pace, while service exports dropped significantly (-2.9%). Since the developments of imports (-0.8%) were weaker than export growth, the net contribution of international trade to GDP growth was positive in the fourth quarter: 0.5%-point. The exports of services fell significantly (-4.1%), while goods imports increased modestly (0.5%).

Looking at it from a sectoral perspective, growth was strongest in water utilities (3.9%), specialised business services (3.6%), IT (2.8%), financial services (2.5%) and the manufacturing industry (2.3%). Mining (i.e. oil and gas, -28.0%), trade, transport and hospitality (-0.9%) and agriculture (-0.4%) saw their value-added fall.