Improving Dutch economy fell 0.8pc in 2003

12 February 2004

AMSTERDAM — The Dutch economy contracted by 0.8 percent in 2003, the first 12-month decline since 1982, but is showing signs of a recovery, figures issued by the Central Bureau of Statistics (CBS) indicated on Thursday.

The CBS said Gross Domestic Product (GDP) grew by 0.3 percent in the last quarter of 2003 compared with the third quarter. This is an indication that the economy is on the road to improvement.

This growth also came on top of a stabilisation of GDP in the third quarter of 2003 as the Dutch economy climbed out of recession following the previous nine-months of negative growth.

On a yearly comparative basis, fourth quarter GDP was 0.5 percent lower than the same period in 2002, public news service NOS reported.

The CBS said the negative 2003 GDP result was due to reduced household spending and reduced business investment. Exports remained unchanged in comparison with 2002, while imports rose by 0.5 percent.

Government spending was the only sector that showed positive growth, increasing by 2.4 percent. The spending increase was driven by the healthcare sector, with spending also rising in the education and public transport sectors.

Faced with a growing budget deficit, the government has cut EUR 5.7 billion from the 2004 Budget as part of a EUR 17 billion savings drive to reduce the deficit to about 0.5 percent of GDP in 2007. It has also reached a two-year wage freeze with unions and employers.

Meanwhile, the CBS figures indicated households spend 1.3 percent less than 2002, the first decline in household consumption spending since 1982. Purchases of durable goods, especially furniture, showed the strongest decline.

There was a 3.4 percent fall in business investment in 2003. Spending on company premises and equipment showed the biggest decline, but less money was also spent on infrastructure and company cars. Investment on computers increased.

In most business divisions, production fell in 2003. The most notable drop occurred in manufacturing, construction and mining. Service providers, such as cafés, restaurants and hotels plus temping agencies also reported strong declines.

Telecoms firms, financial institutes and the healthcare sector reported improved output in 2003.

Subject: Dutch news