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The Netherlands is the sixth-largest economic power in the Eurozone and the fifth-largest exporter of goods. The country is very open to trade and consequently to the global economic conjuncture. For the past few years, the recovery in Europe had allowed the Dutch economy to grow at a dynamic pace, although trade uncertainty at the global level, the Brexit process and most of all the spread of the COVID-19 pandemic caused the Dutch economy to contract. Nevertheless, the country’s GDP rebounded in 2021 (+4.9%) and 2022 (+4.5%), on the back of solid export and investment growth (IMF). For 2023, a set of measures has been announced to mitigate the impact of high energy prices and support domestic demand. However, the decrease in households’ real disposable income, tightening financial conditions and the weak external environment caused by the Russia-Ukraine conflict are expected to weigh heavily on growth, which is forecast at 0.8% for the year. Rising investments and a positive contribution from external trade should help the country’s economy grow at a faster pace in 2024 (+1.7% - IMF).
In recent years the government’s fiscal policy has been expansionary; nevertheless, the Dutch public finances remained sound, recording budget surpluses. The trend inverted as a consequence of the fiscal measures taken to contain the Covid-19-induced crisis and then the effects of high inflation prompted by the conflict in Ukraine. Government revenues picked up in 2022 driven by income taxes and Dutch gas fields, contributing to a reduction in the fiscal deficit, which stood at 1.2% of GDP. In light of an expansionary budget that includes a price cap on electricity and gas, a reduction in the excise duty on fuel, and a rise of the minimum wage by 10%, the government deficit is forecast to increase to 1.4% of GDP in 2023 (IMF – 4% according to the EU Commission) and 2.1% next year. Similarly, the debt-to-GDP ratio is projected to increase from 50.3% of GDP in 2022 to 52.4% in 2023 and 53.2% in 2024 (EU Commission). Fueled by high energy prices, inflation reached a record level of 12% in 2022. The aforementioned price cap should contribute to a reduction in headline inflation, forecast at 8% in 2023, before the rate returns closer to the ECB’s target by 2024 (2.7% IMF).
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 69,715 in 2022 (PPP – data IMF). The Dutch labour market remains tight, with the unemployment rate decreasing to 3.5% in 2022 (from 4.2% one year earlier). Nominal wages have been growing, although not as much as inflation. For 2023 and 2024, the IMF expects the unemployment rate to increase slightly to 3.9% and 4%, respectively.
|Main Indicators||2020||2021||2022 (E)||2023 (E)||2024 (E)|
|GDP (billions USD)||909.07||1,013.52||993.68||1,080.88||1,135.12|
|GDP (Constant Prices, Annual % Change)||-3.9||4.9||4.5||1.0||1.2|
|GDP per Capita (USD)||52,222||57,997||56,489||61,099||63,912|
|General Government Balance (in % of GDP)||2.2||1.6||-0.2||-2.3||-2.2|
|General Government Gross Debt (in % of GDP)||54.7||52.4||48.5||48.2||47.3|
|Inflation Rate (%)||1.1||2.8||11.6||3.9||4.2|
|Unemployment Rate (% of the Labour Force)||4.9||4.2||3.5||3.9||4.2|
|Current Account (billions USD)||46.74||72.80||54.52||68.05||71.90|
|Current Account (in % of GDP)||5.1||7.2||5.5||6.3||6.3|
Source: IMF – World Economic Outlook Database, Latest data available.
Note : (E) Estimated data
The agricultural sector represents 1.5% 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. This makes the Netherlands the second-largest exporter of agricultural products in the world (after the U.S.). 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 53,233 (Agricultural Census). According to the latest data by CBS, in 2022, the Dutch agricultural sector income increased by 1.9% compared to 2021. At the same time, animal output dropped slightly (-0.7%) while crop output fell relatively sharply by -3.4%. The total agricultural output was 2.1% lower year-on-year.
Industrial activity generates around 18.1% of the Dutch GDP, mainly through food processing, the petrochemical industry, metallurgy and the transport equipment industry. The Netherlands is also one of the largest producers and distributors of oil and natural gas. The secondary sector employs 16% of the workforce. The World Bank estimates that the manufacturing sector alone accounts for 11% of the country's GDP. Although growing by 3.3% as of October 2022, the average daily output generated by the Dutch manufacturing industry was lower compared to the preceding one and a half years.
Services account for over 52.5% of national revenue and employ 79% 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 plays an important role in the economic functioning of the country and has a relatively large size when compared to the GDP, its assets accounting for 330% of GDP in 2022, with the five largest banks accounting for about 85% of the total assets of the sector (European Banking Federation).
|Breakdown of Economic Activity By Sector||Agriculture||Industry||Services|
|Employment By Sector (in % of Total Employment)||2.1||16.1||81.8|
|Value Added (in % of GDP)||1.5||18.1||69.4|
|Value Added (Annual % Change)||2.4||4.9||5.3|
Source: World Bank, Latest data available.
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Latest Update: September 2023