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Economic survey of the Netherlands 2008: Challenges facing the Dutch economy

 

Contents | Executive summary | How to obtain this publication | Additional info

The following OECD assessment and recommendations summarise chapter 1 of the Economic survey of the Netherlands published on 31 January 2008.

Also click here to see an excerpt on "challenges facing the Dutch economy".

 

Contents                                                                                                                   

The economy should continue expanding relatively fast, but there is a large degree of uncertainty…

Real GDP growth quickened in 2006-07, reaching an average annual rate close to 3%, reflecting buoyant business investment and exports. The economy is projected to continue expanding slightly above trend in 2008, eliminating the slack in productive capacity and raising output above potential. At the same time, the unemployment rate is projected to decrease further and fall below the Secretariat’s estimate of the structural unemployment rate (3½ per cent), indicating labour market tightness. As the job vacancy rate is already at an historical high, there is a risk that real wages will accelerate, repeating events at the turn of the century when labour costs reacted strongly to labour shortages, hurting competitiveness and corporate profitability. However, high uncertainty prevails in these short-term prospects, magnified by the financial market turbulence during the summer of 2007. Like other countries, the Netherlands is exposed to the prospect of a bank credit squeeze. Dutch households have highly-leveraged balance sheets, hold a large part of their assets in the form of housing and have a high marginal propensity to consume out of housing wealth. Even though OECD estimates suggest that the risk of a house price correction is not particularly high, there is evidence that house prices have diverged from fundamentals. A stagnation of house prices would imply a less dynamic growth of private consumption and a decline in house prices could exert a significant drag.

 

The labour market

Source: OECD, Main Economic indicators, 2006, Statistics Netherlands.

 

How to obtain this publication                                                                               

The Policy Brief (pdf format) can be downloaded in English. It contains the OECD assessment and recommendations.The complete edition of the Economic survey of the Netherlands 2008 is available from:

Additional information                                                                                             

 

For further information please contact the Netherlands Desk at the OECD Economics Department at eco.survey@oecd.org.  The OECD Secretariat's report was prepared by Jens Hoj, Ekkehard Ernst and Jasper Kieft under the supervision of Patrick Lenain. Research assistance was provided by Laure Meuro.

 

 

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