Euro Challenge February 2019 The

An overview of the Dutch economy The global financial and economic crisis had a deep impact on the Dutch economy due to its trade and financial links. Now out of the recession, the country is experiencing growth again but faces long-term challenges.

The Netherlands was one of the moderate but remain solid thanks founding member states of the to strong domestic demand. As European Union. The Netherlands imports grow faster than exports, adopted the on January 1, the trade balance will decline 1999. Euro notes and coins were slightly. The current account introduced on January 1, 2002, surplus, which peaked at a replacing the Dutch . historical high of 10.5% on GDP Did you know . . . ? in 2017, is expected to gradually decline but remain high. Geography The Netherlands is As one of the most open the most densely populated economies in Europe, the state in Europe. About 20% of Netherlands is particularly The government debt-to-GDP its geographic area is below sea vulnerable to developments in the ratio is declining at a relatively level. global economy. As such, it could fast pace on the back of budget not escape unscathed from the surpluses and nominal GDP History In the era referred to global crisis that began in 2008. growth. In 2019, the debt level is as the Dutch Golden Age, Economic activity experienced a expected to fall below 50% on colonies and trading posts were severe contraction of 3.5% in GDP. Further re-privatization of established all over the globe. 2009, climbed back to positive financial institutions could lead to The growth the following year, but then faster debt reduction. Risks to was the world's largest fell back into recession. The Dutch the Netherlands' outlook are a commercial enterprise in the government's public finances worsening of the economic 17th century. deteriorated sharply, from a climate or lower-than-projected surplus in 2008 to a deficit in 2010. wage growth, which would affect In the late-1636 The parliament passed the Spring income taxes. and early-1637, a mania for tulip Accords in May 2012, which bulbs swept through the introduced major reforms in the Netherlands. Before the market labor and housing markets as well crashed, a single bulb fetched as changes to the pension system. the equivalent of 10 years' Despite the severe economic salary for the average Dutch crisis, the Netherlands has worker. recovered substantially with growth above 2% since 2015 and Culture Famous Dutch a declining unemployment rate painters include Pieter Bruegel, since 2014. Rembrandt van Rijn, Johannes Vermeer and Vincent van Gogh. The Netherlands is an important export-oriented economy and is Fun Fact In the Netherlands, known for its stable industrial TV shows and movies for adults relations, low unemployment rate, are subtitled, helping with and sizable current account foreign language acquisition. surplus. Growth is expected to Only programs for children are dubbed into the .

Euro Challenge 2019

Exports The Netherlands The Netherlands’ Economy – Key Facts remains a very open economy

– exports account for 82.4% of • In 2016, the Netherlands had the 6th highest GDP per capita among GDP and the country is the EU member states. It has a population of about 17 million anticipated to have a current inhabitants. account surplus of 10.1% in 2018. • The new coalition government announced an expansionary fiscal policy for 2018-2021. The policy includes plans for government Wages In recent years, wage consumption and public investment increases. By targeting social growth was minimal. affairs, defence, and education, the plan should increase domestic However, the tightening labor demand and help lead to greater GDP growth. market and robust employment rates are putting upward pressure on wages. • The World Economic Forum (WEF) Global Competitiveness Report Trade unions are also starting for 2018 ranked the Netherlands 6th out of 140 countries in terms of to campaign for higher wages, national competitiveness. Companies in the Netherlands are skilled with demands higher than in in absorbing new technologies. Business activity is supported by a past years. good education system.

Labor market The labor • The World Bank's Doing Business Report for 2019 ranked the market is incredibly strong and Netherlands 36th out of 190 countries. The ease of getting credit reaching record levels of has improved but remains a major downside to the Netherlands' growth, with unemployment ranking. forecasted at 3.9% in 2018 and 3.6% by 2019. • According to the European Commission's Autumn 2018 Forecast, GDP will grow by 2.8% in 2018 and 2.4% in 2019. Inflation is Debt The government debt- forecast to rise to 1.6% in 2018, driven by higher energy and oil to-GDP ratio is declining prices and upward pressure on wages. Inflation is expected to rapidly on the back of budget increase further to 2.5% in 2019, when the VAT increase kicks in, surpluses and GDP growth. but decrease to 1.7% in 2020. The debt level is expected to References fall below 50% of GDP by • https://ec.europa.eu/info/business-economy-euro/economic-performance- 2019. and-forecasts/economic-performance-country/netherlands_en • https://ec.europa.eu/info/files/autumn-2018-economic-forecast- Trade The Port of Rotterdam is one of the most important netherlands-0_en transport centers in the world • http://www.doingbusiness.org/en/data/exploreeconomies/netherlands# and the largest port in Europe. • https://www.cia.gov/library/publications/the-world-factbook/geos/nl.html • http://reports.weforum.org/global-competitiveness-report-2018/country- economy-profiles/#economy=NLD