Economy of the Netherlands

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Economy of the Netherlands
Currency 1 = 100 cent
Fiscal year Calendar year
Trade organisations EU, WTO and OECD
Statistics [1]
GDP ranking 23th by volume (at PPP) (2005); 15th by per capita (at PPP) (2005)
GDP €625.271 bn(2006)
GDP growth 1.5% (2005)
GDP per capita $30,500 (2005)
GDP by sector agriculture (2%), manufacturing (19%), services (79%) (2002)
Inflation 1.7% (2006)
Labour force 7.53m (2005)
Labour force by occupation services (64%), manufacturing (29%), agriculture (8%) (2005)
Unemployment 6.6% (2005)

[2]

Main industries agriculture-related industries, metal and engineering products, electronic machinery and equipment, chemicals, petroleum, construction, microelectronics, fishing
Trading partners
Exports Exports $365.1 bn(2005)
Main partners Germany (25%), Belgium (12%), France (10%), United Kingdom (9%), Italy (6%) and the United States (4%)
Imports $326.6 bn(2005)
Main partners Germany (17%), Belgium (9%), China 9%, United States (8%), United Kingdom (6%) and France (5%)
Public finances
Public debt $291.8 bn (53% of GDP) (June 2005)
External debt $1.645 trillion (June 2005)
Economic aid €4 bn. (2005)

The Netherlands has a prosperous and open economy, which depends heavily on foreign trade. The economy is noted for stable industrial relations, moderate unemployment and inflation, a sizable current account surplus, and an important role as a European transportation hub. Industrial activity is predominantly in food processing, chemicals, petroleum refining, and electrical machinery. A highly mechanized agricultural sector employs no more than 2% of the labour force but provides large surpluses for the food-processing industry and for exports. The Netherlands, along with 11 of its EU partners, began circulating the euro currency on 1 January 2002. The country is one of the leading European nations for attracting foreign direct investment.

At this moment the Netherlands is the 16th largest economy of the world. (see: List of countries by GDP (nominal)) Between 1998 and 2000 annual economic growth (GDP) averaged nearly 4%, well above the European average. Growth slowed considerably in 2001-05 as part of the global economic slowdown, but the second quarter of 2006 showed a promising 2.8%. Growth will likely exceed 3% both in 2006 and 2007. Inflation is 1.3% and is expected to stay low at about 1.5% in the coming years. According to the definition used by the Dutch Statistics Agency CBS, unemployment is at 5.5% of the labor force. By Eurostat standards however, unemployment in the Netherlands is at only 3.8% - the lowest rate of all EU member states. (all figures: June 2006)

The stern financial policies of the Balkenende cabinets, which are often identified with finance minister Gerrit Zalm, have led to a deficit of only 0.3% of GDP in 2005, coming from 2.1% in 2004. The deficit is expected to show a small rise to 0.5% in 2006, and slight surplus in 2007. In 2006 public debt stood at 51% of GDP and is expected to fall below 50% in 2007 for the first time in 25 years, down from over 80% in the early nineties.

The Netherlands is member of the European Union, the OECD and the World Trade Organisation

Contents

[edit] Government Role

While the private sector is the cornerstone of the Dutch economy, governments at different levels have a large part to play. Public spending, including social security transfer payments, is at 47.9% of GDP (2005). Total tax revenue was 37,5% of GDP (2005), which is below the EU average. In addition to its own spending, the government plays a significant role through the permit requirements and regulations pertaining to almost every aspect of economic activity. The government combines a rigorous and stable microeconomic policy with wide-ranging structural and regulatory reforms. The government has gradually reduced its role in the economy since the 1980s. Privatisation and deregulation is still continuing. With regards to social and economic policy, the government cooperates with its so called social partners (trade unions and employers' organizations). The three parties come together in the Social-Economic Council (‘Sociaal Economische Raad’), the main platform for social dialogue.

[edit] Trade and Investment

The Netherlands, which derives more than two-thirds of GDP from merchandise trade, had strongly positive balance of payments for 2005 estimated at €31.5 billion. [link cbs] Leading export markets (2005) are Germany with 25.1%, Belgium with 12.2% and the United Kingdom and France with both 9.4%. Leading suppliers (2004) are Germany (17%), Belgium (9.4%), China (8.8%) and the United States (7.8%). As becomes clear from these figures, Germany is by far the most important trading partner of The Netherlands.

Leading foreign investors in the Netherlands (2005) are the United States with 18.5%, the United Kingdom (14.1%), Germany (12.0%) and Belgium (10.1%).

[edit] Sectors of the economy

Services account for more than half of the national income and are primarily in transportation, distribution, and logistics, and in financial areas, such as banking and insurance. Industrial activity, including mining, generates about 20% of the national product and is dominated by the metalworking, oil refining, chemical, and food-processing industries. Construction amounts to about 6% of GDP. Agriculture and fishing, although visible and traditional Dutch activities, account for just 2%.

[edit] Energy

While its oil reserves in the North Sea are of little importance, the Netherlands is presently the second-greatest natural gas producer in the European Union and the ninth-greatest in the world, accounting for more than 30% of EU total annual gas production and about 2.7% of the annual world total. Proved natural gas reserves of the Netherlands are estimated (as of January 2005) at about 50-60 trillion cubic feet, or about 0.9% of the world total. Although the Netherlands owns substantial gas reserves in the North Sea, most of its production is presently from on-shore wells, and much of the natural gas produced by the Netherlands comes from Groningen Province, which borders the North Sea. Consumption of natural gas in the Netherlands is only about two-thirds of its production; the rest is exported and the Netherlands is presently the world's fifth-greatest natural gas exporter. Partly as a result of this large reserve of natural gas, nuclear power accounts for only 3.8% of the country’s electricity production.

[edit] Sources

[edit] See also

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