Executive Search in Netherlands – 2020 Outlook
Netherlands Robust but Eyes Slowdown
Despite turbulent times, the Netherlands remains in good shape. That said, in the Netherlands, too, the tide is beginning to turn after years of strong economic growth. The Dutch economy, however, is proving robust. At 1.8% this year and 1.5% in 2020, rates of growth in the Netherlands are in line with what we would expect.
GDP growth in 2019-2021 is set to be lower than in the preceding five years, in line with more adverse international economic developments, and Dutch exports will grow less steeply. In addition, the Dutch housing market is normalising, consumer confidence has dropped, and the tight labour market is driving up production costs.
Nevertheless, domestic spending will be accountable for the largest share in GDP growth by far in 2019-2021. Most of this is accounted for by household consumption. Government spending will also make a solid contribution to economic growth, notably in 2020. Going forward, contributions of housing investment and corporate investment are set to be lower, due in part to the Council of State’s order to cut nitrogen emissions.
Unemployment is projected to edge up from 3.4% in 2019 to 3.6% in 2021, but the labour market will remain tight. A tight labour market contributes to rising wage costs, with negotiated wage growth projected at 2.6% in 2020 and 2.8% in 2021.
In 2019-2021, the largest contribution to growth will be made by domestic spending, most of which is accounted for by household consumption. Government spending is also set to contribute significantly to economic growth, notably in 2020.
The government will further ease the tax burden next year, for working people in particular. This will allow people to keep more of what they earn and increase the financial incentive to work (or work more). This will be offset by an increase in the tax burden for businesses as of 2021. Additional investments will also be made in healthcare benefit and housing benefit.
Furthermore, significantly more people will be entitled to child budget or to larger child budget payments. However, these are forecasts rather than pledges. There is always the possibility that the economy will move in a different direction than expected.
Contact Nancy Koleda for additional discussions.