## Netherland's Economic Outlook in Five Charts

_IMF News, February 14, 2019_

## Source details

**Canonical URL:** [Netherland's Economic Outlook in Five Charts](https://www.imf.org/en/news/articles/2019/02/07/na021219-netherlands-economic-outlook-in-five-charts)

## Other formats

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## Bibliographic details
- Published: February 14, 2019

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### Overview and recent performance
- Growth in the Netherlands has picked up in recent years.
- Unemployment has fallen sharply, reaching a historic low of 3.8 percent.
- Wages grew moderately and inflation remained subdued.
- Real wage and productivity growth have been slow, possibly exacerbated by the increasing share of short-term labor contracts.
- The high savings rate and low level of domestic investment by large multinationals, as well as the high debt and illiquid assets of households, are hindering a pickup in the country's growth potential.

### External position and trade
- The current account surplus remains high at almost 10 percent of GDP, reflecting high corporate savings by mostly multinational corporations residing in the Netherlands.
- Slower global trade and expedited phasing-out of gas production are expected to lead to lower exports and a modest rebalancing in the short term.
- Returns on a rising net foreign assets position will preserve the large current account surplus over the medium term.

### Household sector and domestic demand
- Low wage growth and sizeable labor income taxation are compressing disposable income and limiting domestic demand.
- Household debt remains high, even though households have positive net worth.
- Households are left too cash-constrained to effectively weather downturns and support rebalancing.
- Policy note: Scaling down mortgage interest deductibility beyond current plans would help address the debt bias but needs to go hand-in-hand with more affordable rental opportunities.

### Fiscal position and constraints
- The Netherlands' fiscal position is strong, resulting in declining public debt and sizeable fiscal space.
- Fiscal policy is limited in its potential for rebalancing demand by national rules and capacity constraints.
- Attempts to fully use the available fiscal space in 2018 were unsuccessful due to difficulties with hiring against a background of low unemployment.
- Near-term budget plans imply greater spending.
- Public debt is projected to decline below 40 percent of GDP by 2024, reopening substantial fiscal space over the medium term.

### Policy recommendations to support rebalancing and medium-term growth
- Boost disposable income by bringing it closer in line across different types of labor contracts.
- Further lower the weight of tax on labor.
- Foster productivity and wage growth.
- Promote the growth of small and medium-sized enterprises by:
  - Expanding direct support to research and development.
  - Investing in digitalization and lifelong learning.
  - Establishing a business credit bureau.

*Netherland's Economic Outlook in Five Charts — February 14, 2019*

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## References

- [https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)
- [PRESS CENTER](http://presscenter.imf.org/)
- [Read the report](https://www.imf.org/en/Publications/CR/Issues/2019/02/12/The-Kingdom-of-the-Netherlands-Netherlands-2019-Article-IV-Consultation-Press-Release-Staff-46592)
- [Read the selected issues](https://www.imf.org/en/Publications/CR/Issues/2019/02/12/The-Kingdom-of-the-Netherlands-Netherlands-Selected-Issues-46593)
- [Read the press release](https://www.imf.org/en/News/Articles/2019/02/12/pr1936-kingdom-of-the-netherlands-imf-executive-board-concludes-2019-article-iv-consultation)
- [The Netherlands and IMF](https://www.imf.org/en/Countries/NLD)
- [Euro economic outlook](https://www.imf.org/en/News/Articles/2018/11/07/na181107-europe-economic-outlook-in-six-charts)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2019/02/07/na021219-netherlands-economic-outlook-in-five-charts_