Netherlands: Economic and Political Overview
In this page: Economic Outline | Political Outline
The Netherlands is the fifth-largest economic power in the Eurozone and the third-largest exporter of goods and services. The country is very open to trade and consequently to the global economic conjuncture. After economic stagnation in 2023 (+0.1%), real GDP growth in the first half of 2024 was volatile, mainly due to fluctuations in net trade, which shifted from strongly negative in Q1 to strongly positive in Q2. Following a contraction in the first half, private consumption in the second half of 2024 benefitted from strong real wage growth, with contractual wages rising above 6% and a tight labour market. Investment growth picked up modestly as financial conditions improved and public investment increased. Overall, GDP growth in 2024 was estimated at 0.6% by the IMF. Looking ahead, private consumption is expected to rise further, supported by solid wage growth, falling inflation, and tax cuts boosting households' real disposable incomes. The outlook for business investment and trade is also set to improve, driven by easing financial conditions and a better external environment. Real GDP is forecast to grow by 1.6% in 2025 and 1.8% in 2026.
According to CBS, government revenues and expenditures both rose by 7% in the first three quarters of 2024. Revenues increased by over EUR 24 billion, driven by a EUR 22 billion rise in premiums and taxes, while other revenues grew by nearly EUR 2 billion. Total expenditure also rose by nearly EUR 24 billion, with benefits and healthcare spending accounting for almost EUR 14 billion. In 2025, the budget deficit is expected to rise to 1.9%, partly due to a court ruling requiring tax refunds (impact: 0.5 pps) and income tax cuts in lower brackets. Higher public investment will further increase spending (EU Commission). Public debt amounted to 42.3% of GDP in 2023, although higher deficits are expected to raise the debt ratio to 45.1% in 2025 and 46.2% in 2026, remaining below the euro area average. The Netherlands' strong external position is driven by recurrent high current account surpluses and its role as a global trading hub. From 2020 to 2024, surpluses averaged 8.4% of GDP, reflecting high domestic savings. A multinational-dominated corporate sector with significant foreign assets supports a net international investment position of 54.1% of GDP in 2023 (Fitch Ratings). Statistics Netherlands (CBS) reported that consumer prices in the Netherlands rose by 3.3% in 2024, down from 3.8% in 2023, with housing and tobacco prices as the main drivers of inflation. For this year, the IMF forecasts inflation at 2.3%, followed by 2% in 2026.
The Netherlands presents a very high income per capita, which is distributed in a relatively equal manner. The GDP per capita is above the EU average and was estimated at USD 83,823 in 2024 (PPP – data IMF). The labour market remains strong, with low unemployment and more vacancies than job seekers. However, employment growth has slowed. As labour force growth outpaces weak job creation, unemployment is expected to rise slightly from 3.9% in 2024 to 4.2% in 2025 and 4.5% in 2026 (IMF).
| Main Indicators | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) | 2027 (E) |
|---|---|---|---|---|---|
| GDP (billions USD) | 1,154.69 | 1,218.40 | 1,272.96 | 1,325.69 | 1,372.99 |
| GDP (Constant Prices, Annual % Change) | 0.1 | 0.6 | 1.6 | 1.8 | 1.8 |
| GDP per Capita (USD) | 64,829 | 67,984 | 70,606 | 73,105 | 75,297 |
| General Government Balance (in % of GDP) | 0.1 | -1.1 | -2.3 | -2.7 | -2.9 |
| General Government Gross Debt (in % of GDP) | 45.0 | 44.3 | 45.1 | 46.2 | 47.2 |
| Inflation Rate (%) | 4.1 | 3.2 | 2.3 | 2.0 | 2.0 |
| Unemployment Rate (% of the Labour Force) | 3.6 | 3.9 | 4.2 | 4.5 | 4.7 |
| Current Account (billions USD) | 113.79 | 121.87 | 128.01 | 133.24 | 139.50 |
| Current Account (in % of GDP) | 9.9 | 10.0 | 10.1 | 10.1 | 10.2 |
Source: IMF – World Economic Outlook Database, Latest data available.
Note : (E) Estimated data
The agricultural sector represents 1.7% of the country's GDP and employs 2% of the active population (World Bank, latest data available). This sector produces high yields, which is due in part to the intensive farming of arable land. Nearly 60% of the production is exported, either directly or through the food industry, making the Netherlands one of the largest exporters of agricultural products in the world: in 2023, agricultural goods exports were worth EUR 123.8 billion, representing a 1.6% increase compared to 2022. The main crops exported are cereals, potatoes and horticultural products. The Netherlands is also the largest flower exporter in the world. The number of companies active in the sector stands at 52,107 (Agricultural Census). According to the latest data by CBS, the Dutch agriculture sector's income rose by 5.1% in 2024 despite a 1.2% decline in production volume. Animal and crop production dropped by 0.7% and 1.4%, respectively. Higher output prices (+0.2%) and lower costs offset the decline, with total production value down 1% to EUR 41 billion.
Industrial activity generates around 18.7% of the Dutch GDP and employs 14% of the workforce. Among the main activities, there are the chemicals and petroleum sectors remain robust, with major players like Royal Dutch Shell fueling significant export revenues (the Netherlands is also one of the largest producers and distributors of oil and natural gas). Moreover, in high-tech industries, particularly semiconductor and microelectronics manufacturing led by ASML, Dutch companies are global market leaders. Food processing and engineering sectors also play key roles in sustaining the country’s industrial performance. The World Bank estimates that the manufacturing sector alone accounts for 11% of the country's GDP. Data by CBS show that, in December 2024, the calendar-adjusted output of the Dutch manufacturing sector dropped by 4.4%, marking 18 consecutive months without growth.
Services account for over 69.6% of national revenue and employ 84% of the workforce. The services sector is focused mainly on transportation, distribution, logistics, banking and insurance, water engineering and new technologies. The country is also Europe's leading service provider in ocean freight, which is not surprising as its economy largely depends upon exports. The Dutch banking sector is pivotal to the country's economy, with assets totalling EUR 2,700 billion—nearly three times the size of its GDP. The sector is highly concentrated, with the six largest banks holding around 85% of total assets (European Banking Federation). Tourism's contribution to the Dutch economy rose to 3.8% in 2023, up from 3.5% in 2022. Value added grew across all tourism-related sectors, with the industry's economic contribution reaching EUR 36.7 billion, a 9% increase from 2022 (adjusted for price changes) and nearing pre-pandemic 2019 levels (CBS). Concerning the retail sector, the total turnover rose by 2.1% in 2024, the lowest growth in a decade, with sales volume up 1.4%. Non-food shops grew by 3.9%, while food shops saw a 1.0% decline. Online turnover increased by 5.8%.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
|---|---|---|---|
| Employment By Sector (in % of Total Employment) | 1.9 | 14.1 | 84.0 |
| Value Added (in % of GDP) | 1.7 | 18.7 | 69.6 |
| Value Added (Annual % Change) | -1.7 | -2.6 | 0.9 |
Source: World Bank, Latest data available.
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The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.
Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024
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Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House
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