Country facts
| Capital city: |
Amsterdam |
| Surface area: |
42,000 sq km |
| Population: |
16.3 million |
| Official language(s): |
Dutch |
| Head of State: |
H.M. Queen Beatrix |
| Head of Government: |
H.E. Prime Minister Dr Jan Peter Balkenende |
| Australian exports to the Netherlands: |
A$2,974 million |
| Australian imports from the Netherlands: |
A$1,495 million |
| The Netherlands' principal export destinations: |
Germany, Belgium, UK |
| The Netherlands' principal import sources: |
Germany, Belgium, USA | (Source: Department of Foreign Affairs and Trade - Country economic fact sheet)
Economic climate
For a country with a small population, the Netherlands has a large and powerful economic position. It is the world’s eighth largest exporting country (third largest in the export of food), the sixth-largest source of investment, and its gross domestic product (GDP) is the 15th highest in the world. The Dutch economy is extremely open to world trade as well to the other members of European Union (EU) or the other parts of the world.
The public's spending power, investment and exports are set to rise this year as an exceptionally long period of recession seems to be ending for the Dutch economy. Growth in consumption, investments and exports is also expected to pick up. The competitive position of Dutch trade and industry is improving. The labour market also shows positive changes. Employment has been rising since the end of 2005 and unemployment is falling.
In 2006 the economic growth will be estimated at 2.75 per cent and will rise until three per cent in 2007. Dutch economy will probably grow faster than other euro areas.
The purchasing power will grow one per cent in 2006 and 2007 although there will be differences in every household. The labour market shows some positive changes. The main driving force behind the recovery is the increase in exports and investment. Exports of goods manufactured in the Netherlands, however, distinctly improved but the growth of re-exports is still higher than the growth of exports of goods manufactured in the Netherlands. Domestically produced exports will show the highest growth rate thus far in this decade.
In 2006 domestic expenditure will make an important part to develop Dutch economy. Consumption will increase by 1.25 per cent in both 2006 and 2007, thanks to the recovery of purchasing power and the upsurge in the labour market. Investments are projected to grow considerably, by eight per cent this year and five per cent the next. The expected rise in production will cause the capacity utilisation rate to rise firmly. Profitability can increase further.
(Source: Netherlands Bureau for Economic Policy Analysis)
Inflation
In the first two month of this year, inflation fell to 1.2 per cent. According to CPI the average inflation in 2005 was 1.7 per cent; only 0.5 per cent higher than 2004. Just like 2004 the inflation was low because of the increase of energy products. Prices of gas, electricity and motor fuels increased and this contributed one per cent point to the 1.7 per cent inflation. Decrease of the other goods or services and the fact that net price increased, accounted for 0.7 of a per cent point. Different than in 2004, for energy products only 0.4 of a per cent point of inflation by energy products and 0.8 by other goods and services.
(Source: Finfacts Business News Centre)
The effect of the supermarket price war diminished in 2005. Dutch consumers paid 9.4 per cent less for these products, while in other countries the prices remained more or less unchanged (-0.2 per cent). The low rate of inflation in the Netherlands is mainly caused by the developments in prices of food and non-alcoholic drinks.
Prices of these products fell by 5.2 per cent between August 2003 and August 2004. Food and non-alcoholic drinks were on average 1.2 per cent cheaper than one year previously. In 2004 these products were 3.5 per cent cheaper.
Crop effects also played a part in the smaller price decreases for food products in 2005. Prices of clothes and shoes, and communication on the other hand fell by more in 2005 than in 2004. The increase in rates of consumption taxes and government services was also smaller than in 2004.
Consumer confidence
While in 2004 the consumer confidence shows a rising trend still consumer prefer to save their money rather than spending their money. After dropping in 2003, the economy picked up in the first six months of 2004. Consumers’ opinions on the economic climate and willingness to buy also remained stable in the first two months of 2006. The consumer opinions on the economic climate have hardly changed, their opinions on the economic situation remained the same.
In 2006 consumers are a bit more positive about buying expensive items, like pieces of furniture. Since the start of 2006 consumers mainly became more positive about the future development of the economy and their own financial situation. Consumer confidence reached a four-year record high in March, although it is still below the average for the last two decades.
Consumer expenditure
Consumer confidence was up again in March 2006. Since September 2005 consumer confidence has gradually improved. In January 2006, households spent 1.5 per cent more on goods and services than in January 2005. They spent considerably more on durable goods, such as household appliances and furniture. Dutch consumer expenditure on goods in January 2006 was up by 2.3 per cent on January 2005. The increase was mainly due to a greater consumption of durable goods, on which consumers spent 3.8 per cent more. January 2006 was the eight month in a row in which domestic consumption was higher than the year before. The 1.5 per cent growth rate is about the same as the average growth rate in consumption during the fourth quarter of 2005.
(Source: 'Consumers are buying more durable goods', 24 March 2006, Statistics Netherlands)
Producer confidence
Producer confidence in the manufacturing industry hardly changed. Dutch manufacturers, particularly manufacturers of semi-fabricated goods are more optimistic with respect to their future output. Producers of investment goods are also slightly more positive about the position of their stocks. Manufacturers are, on the other hand, more negative about their order positions. This applies in particular to producers of consumer goods. Due to sustained producer confidence, manufacturers are less inclined to cut back on staff. Only 13 per cent intend to reduce staff, whereas nine per cent have plans to recruit new staff in the coming quarter. Producers of consumer goods are also slightly less positive. One in nine manufacturers expects the prices of their products to decrease, while one in 20 expects them to increase.
(Source: 'Producers' confidence almost unchanged', 22 December 2005, Statistics Netherlands)
Key economic indicators and statistics for 2006:
GDP - US$670.9 billion
GPD per capita - US$41,049
Real GDP growth - 3 per cent
Inflation rate - 1.7 per cent
Political climate
The capital of the Netherlands is Amsterdam, but the seat of government and location of ministries and embassies is The Hague. The Netherlands is a constitutional monarchy with a parliamentary system. The head of state is Her Majesty Queen Beatrix who was crowned in 1980. The country is governed by a parliamentary democracy underpinned by a written constitution.
Since the beginning of 2003 a new centre-right government has been put in place (after a short period of political turmoil due to the murder of Pim Fortuyn). The Prime Minister is the Christian Democrats leader, Dr Jan Peter Balkenende. During the current weak economic climate, the government focused on a strict fiscal policy to keep in line with the European Union requirements ('Stability Pact').
Trade relations and statistics
The Netherlands is Australia's second largest source of foreign direct investment from Europe, behind only the UK. The strong export growth evidenced over the last few years means that the Netherlands has became Australia's third largest European Union (EU) export destination. Overall, the Netherlands is Australia's fifth-largest trading partner in the EU and the 20th-largest overall.
Major Australian exports to the Netherlands (2006-07):
- Coal - A$930 million
- Zinc ores and concentrates - A$477 million
- Medicaments (including veterinary) - A$195 million
- Alcoholic beverages - A$101 million
Major Australian imports from the Netherlands (2006-07):
- Medicaments (including veterinary) - A$115 million
- Road tractors for semi-trailers - A$72 million
- Medicinal & pharmaceutical products - A$52 million
- Coffee and coffee substitutes - A$45 million
(Source: Department of Foreign Affairs and Trade - Country economic fact sheet)
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