With an energy mix comprised of nearly 90% fossil fuels, the Netherlands have been hit by the full brunt of the sharp rise in oil and gas prices since the outbreak of the Russia-Ukraine war. As a result, the Netherlands has one of the highest inflation rates in Europe. Even so, household consumption is resilient, and the majority of companies esteem that business will remain vigorous in the months ahead [...]
Following the gradual lifting of health restrictions, the economy rebounded strongly in Q2 and this dynamism continued in Q3. Despite the favourable economic climate and the satisfactory state of public finances, the political parties are still struggling to form a government even six months after the legislative elections. Nonetheless, the outlook remains bright, especially thanks to the rapid expansion of world trade.
Thanks to healthy government finances and a light lockdown strategy, the Netherlands weathered the crisis better than the surrounding countries. Nevertheless, the economy was in a mild recession in Q1 2021. Economic sentiment indicators point to rapid recovery in the second half of the year. Despite the clear victory of the outgoing government at the general election in March, the formation of a new coalition is in turmoil [...]
The VVD (conservative free-market liberals) and D66 (social liberals) were the big winners at the general election held on 17 March, by gaining 35 and 23 seats, respectively. However, the CDA (Christian Democrats) lost heavily. The populist right won slightly as the losses at the PVV were compensated by a huge gain by the FvD, which had campaigned against the lockdown measures. The parties on the left suffered severe losses and tumbled from 37 seats in the old parliament to only 26 [...]
Economic activity contracted less than in the neighbouring countries (-8.5%). Hard data confirm a rebound in Q3, although social distancing rules are weighing on activity, in particular in services. Thanks to the substantial financial buffers, the government can cope with the considerable costs caused by the Covid-19 pandemic. In 2021, the deficit is projected at around 5% of GDP and the debt ratio may end up just above 60% [...]
As the country went into a selected lockdown, business confidence plummeted. To limit the economic fallout, the government announced a comprehensive package to protect jobs and businesses, its favourable budgetary position giving it sufficient firing power. Nevertheless, each month of lockdown may reduce output growth by around 2 percentage points. In the case of a rapid recovery, the GDP shrinkage could be limited to around 3.5% in 2020.
Economic activity may have substantially weakened in Q4, due to the slowdown in world trade and the nitrogen and PFAS problems. Fiscal policy should become very accommodative, although it remains doubtful if the government will succeed in implementing all the spending plans. Growth is likely to slow this year, before picking up in 2021 on the back of a stronger global economy. However, climate challenges and labour shortages continue to weigh on activity in particular in construction [...]
GDP growth is slowing due to the strong deceleration in global trade. Nevertheless, the economy continued to operate close to its potential until 1Q 2019 thanks to the strength of domestic demand, underpinned by strong disposable income growth and an expansionary fiscal policy. As the government has lost its majority in the Senate, it needs the cooperation of the opposition parties for passing new legislation. However, a government crisis is not imminent [...]
The Dutch economy is experiencing a strong recovery. This bodes well for the new four party centre-right coalition that took over end October. The government aims at keeping a small budget surplus. Household and business will profit from substantial tax reductions. On Europe, the government would like a return of the strict rules of the Maastricht treaty. Growth is expected to remain strong in the coming years. However, production constraints are likely to appear [...]
The Netherlands is a parliamentary constitutional monarchy with a Prime Minister and a monarch.
The Netherlands is a small, densely populated country. It is among the richest countries in the world, with GDP per capita more than 50% above the EU average. Trade is crucial for the Netherlands. The seaport of Rotterdam is the largest in Europe and Schiphol International Airport is the third busiest airport in Europe, both in passenger terms and cargo volume. Exports of goods and services made up more than 80% of GDP in 2019. However, due to the large share of re-exports, the contribution of exports to GDP is limited to around 30%.
The importance of industrial activity has declined. In 2000, the manufacturing sector accounted for 15% of value added. By 2020, its share had declined to about 15%. Gas exploration has substantially declined due to production limitations after a series of mini-earthquakes in Groningen. The share of the mining sector in GDP declined to less than 0.5% in 2020 compared with 3.8% in 2008. By contrast, the share of public sector increased.As an open economy, the Netherlands has responded well to the challenges of globalisation. More than 20% of employees have flexible working arrangements, which is among the highest in the EU. A third of these are on-call employees. Thanks to its favourable fiscal environment and excellent infrastructure, the Netherlands is home to many multinational corporations. It is also an important financial centre.
