Netherlands Missions, United Arab Emirates

Economy and Finance

The Dutch Economy

The Netherlands is one of the world’s top ten economies in export volume and ranks among the top twenty for GDP, despite being geographically one of the smallest countries in the world.

Gateway to Europe
The Netherlands owes its high rankings in large part to its advanced transport infrastructure – with the port of Rotterdam and Schiphol Airport as its hubs – and its highly developed telecoms infrastructure. Rotterdam is Europe’s largest seaport, and the fourth largest in the world in terms of container activity, while Schiphol is western Europe’s fourth largest airport. Together, they have helped build the Netherlands’ reputation as ‘the gateway to Europe’.

Investment from abroad
The Netherlands has long been viewed as an attractive investment opportunity. The country offers an excellent entry point to business in the European Union because of its stable and flexible labour market, its central geographical location and excellent infrastructure, its well-educated and multilingual work force and the considerable expertise available here.

Expats
Just as many companies decide to set up European operations in the Netherlands, foreign visitors are also often enticed to stay and find jobs and accommodation, particularly since the EU’s internal borders have opened. The Dutch government has introduced tax measures that make it attractive for expats to work here, and bureaucratic requirements have been simplified, making it easier for employers and employees to acquire the right papers.

Randstad
After Paris, London and Milan, the Randstad (the conurbation that comprises Amsterdam, The Hague, Rotterdam and Utrecht) is the largest economic urban area in the European Union in GDP terms. This is largely thanks to the strong presence of financial and commercial services, which are key drivers of the Dutch economy.

An open economy is a dependent economy
The Netherlands has developed into a well-diversified economy, with strong services and business sectors. The Dutch economy has been a free-market system for the last two decades, with the government actively reducing its role to regulation and taxation. The economy is also characterised by moderate unemployment and a sizeable current account surplus.

However, a range of factors influence its performance. One is the relative significance of trade, which accounts for 60 percent of GDP. This makes the Netherlands – despite the relative resilience of its economy - highly dependent on the health of the wider global economy and therefore susceptible to its fluctuations. Another factor – one that may mitigate the effects of any upswing in the world economy – is the relatively high cost of labour (wages and pension contributions). The global economic downturn adversely affected the Dutch economy, which went into recession in 2009 , contracting by 4 percent. It is expected that the economic recovery will be slow, with estimated growth to be around 1.5 percent until 2013.

International trade
Around 80 percent of Dutch exports go to other nations within the EU, and 70 percent of goods imported into the Netherlands come from the EU. Germany is the Netherlands' most significant export and import partner, receiving around 25 percent of the Netherlands’ exports and supplying around 17 percent of the Netherlands’ total imports.

Trade activity is highly developed, with special focus on food processing, chemicals, oil refinery and electrical machinery. The agricultural industry is highly mechanised, and although the sector employs a very low percentage of the work force, it produces large surpluses for export and ranks the third highest worldwide in terms of exports. One of the most famous Dutch exports is flowers. The Netherlands exports four billion flower bulbs a year, mostly tulips. 60 percent of these go to Germany, the UK, France and Japan. The US tops the list of individual customers, importing some 900 million bulbs a year.

The government does not discriminate between foreign and domestic companies, allowing foreign investors access to the same privileges and obligations as their Dutch counterparts. The Netherlands Foreign Investment Agency (NFIA) assists foreign firms to invest in the Netherlands.

Sectors
The Netherlands’ single most dominant sector is that of business services, which accounts for approximately two-thirds of both its GDP and workforce. Mineral extraction, especially the production of natural gas, is another prominent sector.

The services sector has shown marked growth, while agriculture and industry have declined in their percentage contribution to GDP. Nearly 80 percent of the Dutch workforce is engaged in the services sector, in areas such as transportation, financial and business services (including banking and insurance), and goods distribution.

Other sectors that contribute consistently to the Dutch economy include retail, restaurants, repair services and health care. Important industrial activities include food processing, chemicals, oil refining and electrical machinery. The agricultural and food sector is also a vital part of the Dutch economy, generating approximately 10% of GDP. The Netherlands exports 75% of its agricultural produce.

Chemicals and energy
Some of the world’s largest chemical companies are based here. Not only is the Netherlands one of Europe’s main suppliers of high-tech products for both the industrial and consumer markets, it is also Europe’s largest producer of natural gas, with large northern reserves. Rotterdam receives and refines enormous amounts of crude oil that is ultimately shipped to the rest of western Europe. Thanks to its offshore installations and refineries, the Netherlands is a major player in the oil and gas industries, with strong research and development capacity and a specialised construction industry. The chemical industry in particular aims to use more organic raw materials and reduce the dependency on petroleum-based raw materials over the next 25 years.

Biotechnology
The Netherlands is a major European centre of biotech industries. The main biotechnology fields are ‘human health’ (therapeutics, diagnostics, and prevention), ‘general’ (biofine chemicals, equipment, and the environment), and ‘agri-food biotechnology’ (nutraceuticals, animal health, plants/seeds, and animal feed). The nutritional research centre in Wageningen is one of the most important in Europe in terms of nutrition and nutritional components. Wageningen is also home to one of the world’s largest agri-food clusters – the Dutch “Food Valley”. The Netherlands has extensive expertise in plant breeding, particularly in plant genomics. Large food and food ingredient companies are actively working together with the Dutch science community on food biotechnology.

Information and communications technology (ICT)
The Netherlands is the sixth largest ICT market in the European Union and has one of the best information technology (IT) and telecoms infrastructures in Europe. The government is committed to growing the ICT sector through investment, cooperation and research. On a global scale, the Netherlands ranks second in broadband networks, third in e-Readiness, fourth in terms of ICT services exports and fifth in the ICT Development Index of the International Telecommunication Union. Opportunities exist in software and computer services in particular, as well as in data communications, network equipment and consumer products.

In the software market, the Dutch are interested in innovative solutions and are happy to deal with foreign suppliers (currently 65 percent of software is imported). Areas of opportunity include security software, internet software and services, and game software. Particular potential exists with small and medium sized companies. Growth in e-commerce and Internet usage has also driven an increase in the services market, creating opportunities in consulting, security services, desktop and network management, and application hosting and outsourcing.

Energy efficiency technology
The Netherlands is at the forefront of utilisation of renewable resources for the production of energy – wind energy and biogas, in particular. However, the Dutch government recognises that it needs to pursue emission targets set by the EU for 2020 and 2050 more agressively. The lighting sector has been identified as an area for improvement, due to the high consumption of electricity for road and public space lighting, for which systems are often out-of-date and in need of replacement. The government has set itself ambitious targets to improve lighting efficiency in four areas: road, public spaces, business and household lighting. The overall objective is to reduce lighting electricity consumption by 20 percent in 2013 and 30 percent in 2020.

Welfare
All in all, the Netherlands a relatively wealthy country with a high per-capita GDP boosted by social security measures that guarantee a minimum income, health care and education.

More information

For specific facts, figures and forecasts regarding the Dutch economy, please visit these websites: