Research Euroland: Fact Book The Netherlands‏

This Fact Book on the Netherlands gives a brief overview of the main aspects of the Dutch economy. The Fact Book can be used as a quick reference point for key ratios, etc. It includes many informative charts and tables.

The Netherlands is a small open economy and the export share represents more than two-thirds of GDP. GDP depends heavily on world demand and its business cycle follows the business cycles in important export markets, especially countries within the European Union. The Netherlands has a high current account surplus. The economy has contracted since Q2 2011 except in H1 2012 when growth was marginally above zero. Still, the unemployment rate remains among the lowest in the euro area.

The government budget was balanced before the crisis but, similar to other European countries, the budget deficit increased to above the Maastricht criteria’s 3% of GDP limit in the years after the crisis due to bank bailouts and expansive fiscal policy. As a result, the Netherlands has been subject to the EU’s excessive deficit procedure since 2009.

Despite the austerity measures agreed in 2012, the budget deficit is expected to stay above 3% of GDP this year and next, according to the latest economic forecasts from the EU. As a consequence, the Dutch government has identified additional EUR4.3bn in budget cuts in order to reach the 3.0% target in 2014. Whether these austerity measures are needed will be decided upon in September, according to Prime Minister Mark Rutte. The government debt is currently slightly above 70% of GDP – substantially below the euro area average.

The housing bubble burst in 2008 and existing home sales fell dramatically and are still below the 2000 level. House prices have declined nearly 20% since the peak in 2008. Household loans represent about 130% of GDP, but are countered by high mandatory pension savings.

The latest general election was held in September 2012. The conservative VVD became the biggest party followed by the social democratic PvdA. On 29 October 2012, it was announced that the two parties had agreed to form a unity government.

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