Economy

Trends

Gradual recovery from severe recession

The Dutch economy grew by 2.2 percent in 2016. It was the second year in a row that the economy grew by more than 2 percent. In recent years, the Dutch growth rate has stood out favourably among European countries. However, the economic crisis also ran deeper in the Netherlands. On balance, the Dutch economy has not developed very favourably since 2008; France, for example, has seen more rapid growth.

Gross domestic product (GDP) per capita, a measure for economic prosperity, exceeded the level of 2008 for the first time in 2016 on the back of further economic recovery. This was also the case in many other EU countries, except in the south. The Netherlands’ GDP per capita is one of the highest in the European Union.



Unemployment still high

The fact that the Netherlands has climbed out of deep recession is furthermore evident from recent labour market developments. Unemployment stood at precisely 6 percent of the working-age population in 2016 and is still at historically high levels. At the end of 2016, 467 thousand people under the AOW entitlement age were dependent on income support, 17 thousand up from one year previously. Most other labour market developments were positive. Around 100 thousand new jobs were created and the unemployment rate saw the largest decrease in a decade. The number of unemployment (WW) benefit recipients declined as well, while the number of employees on permanent contracts increased for the first time in years. However, the share of permanent employees in the total active labour force declined further.

Median household income increased by 2.3 percent in 2016, partly due to rising employment. The average wage increase was relatively high as well. CLA wages rose much faster (by 1.8 percent on average) than consumer prices, which saw only a minor increase. Consumer spending as a portion of household income has continued to rise in recent years. In addition, companies have spent a greater share of their revenues.



Multifaceted growth

The current economic recovery is broad-based. The export motor keeps running, while consumption and especially investments have picked up again in recent years, with residential investment up in particular. The volume of export of goods produced in the Netherlands grew by 4.0 percent in 2016. In line with this, the manufacturing industry had a good year. Furthermore, the construction sector has begun recovering after a severe contraction between 2009 and 2013. In addition, the hotel and restaurant sector recorded solid growth, as did business services, especially the temporary employment and travel sectors.

Fast-growing sectors in 2016 in terms of total value added (% of GDP) are: Trade: 2.8 percent, manufacturing: 3 percent, hotels and restaurants: 5.2 percent, construction: 7.7 percent, travel: 8.8 percent and temporary agency sector: 9.3 percent.

On the other hand,the mining and quarrying sector has fared significantly less well. Due to further reductions in natural gas extraction, revenues in this sector have dropped sharply in recent years. The government’s natural gas revenues have fallen by more than 75 percent over the past three years. If natural gas production had remained at the same level as the previous year, economic growth in 2016 would have amounted to 2.5 percent.



Increased activity on the housing market

The slump on the Dutch housing market is often quoted as the main cause of the relatively deep recession as compared to many other European countries. In 2013, residential property sales had nearly halved relative to 2006. The number of transactions increased sharply after that. In 2016, 215 thousand (existing) dwellings were sold, breaking the old record of 2006. House prices are on average still lower than their peak in 2008. Only cities such as Amsterdam and Utrecht have reached pre-crisis levels again or even exceeded them. Just as house prices fell and the decreasing number of transactions had a dampening effect on the economy, rising prices and number of transactions have had positive effects: people buying a house usually also spend on items such as kitchens, furniture and paint.

Moderately rising consumer prices

Although house prices rose again considerably in 2016, only a modest rise was seen in prices for consumer goods and services. In July 2016 prices were on average even lower than one year previously. Falling energy prices in particular had a significant downward effect on average price levels. Prices did increase slightly more rapidly in the final quarter. On average, consumer prices were only 0.3 percent up on the previous year. The rise in consumer prices excluding energy, food, alcohol and tobacco was small at 0.8 percent.



Higher CO2 emissions

The Netherlands’ recent economic growth has had consequences for the environment. After adjustments for the slightly colder winter weather, CO2 emissions increased by 1.2 percent in 2016 relative to the previous year. On the other hand, coal consumption by power stations was much lower in 2016. The share of renewable energy in total electricity production increased from 11 to 13 percent.

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Explanation

Explanation of symbols

empty cell Not applicable
. Data not available
* Provisional figure
** Revised provisional figure (but not definite)
2016-2017 2016 to 2017 inclusive
2016/2017 Average for 2016 to 2017 inclusive
2016/’17 Crop year, financial year, school year, etc., beginning in 2016 and ending in 2017
2014/’15-2016/’17 Crop year, financial year, etc., 2014/’15 to 2016/’17 inclusive

Due to rounding, some totals may not correspond to the sum of the separate figures.

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