August 14, 2019 / 7:55 AM / a month ago

UPDATE 1-Dutch economy stays strong on domestic demand and exports

(Adds more detail, chief economist quote)

THE HAGUE, Aug 14 (Reuters) - Economic growth in the Netherlands unexpectedly held steady in the second quarter at 0.5% on a quarterly basis, helped by strong investments, consumer spending and exports, the Dutch national statistics office (CBS) said on Wednesday.

The Dutch economy has outperformed euro zone peers in the past two years, as unemployment fell to record lows and consumers increased their spending.

In the second quarter it managed to stay strong despite a worrying 0.1% contraction of the German economy, its main trading partner.

“We have done very well in comparison to our neighbouring countries, mainly because of strong domestic demand,” CBS chief economist Peter Hein van Mulligen said.

Growth in the euro zone’s fifth largest economy was as strong as in the previous two quarters, topping the 0.3% rate predicted by economists in a Reuters poll.

A historically tight labour market and rising wages led to a 2% rise in consumer spending, while companies invested 5% more than in the second quarter of 2018.

German weakness did hurt demand for the Dutch industry, but overall export growth accelerated to 3% in the quarter, as the Dutch sold more machines, chemicals and services abroad.

The government’s economic advisory board is set to update its outlook for the Dutch economy on Thursday, after in June forecasting growth of 1.5% for this year and next.

Growth was 2.6% in 2018. (Reporting by Bart Meijer Editing by Peter Graff and Andrew Cawthorne)

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