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The Netherlands - Economy

Whitaker's Almanack Version

Financial Outlook

The Dutch economy contracted by around 1% in 2013, according to government estimates, while officials are projecting growth of just 0.5% in 2014. The budget deficit in 2013 and 2014 is forecast to exceed the EU ceiling of 3% of GDP, and successive rounds of austerity measures to reduce the deficit have taken a toll on spending and confidence. The country’s woes were highlighted in November 2013 when rating agency Standard & Poor’s stripped the Netherlands of its top-grade AAA rating, citing its low growth prospects. The Dutch economy is suffering the consequences of a burst property bubble. Home prices have tumbled by an average 18% since the peak of the financial crisis in 2008, dragging down consumer spending and the wider economy. However, signs of recovery began to emerge in 2013, with house prices moving upward according to Eurostat. There was more positive news in January 2014 when the ratings agency Fitch reaffirmed its own triple-A rating, citing strong underlying economic, institutional, and credit fundamentals, including the country’s consistent current account surpluses and positive net international investment position, as well as its strong financing flexibility.

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