Macroeconomic developments in the Netherlands Investment briefing: The Dutch residential market Dutch embassy in London Wim Suyker 22 January 2014 CPB Netherlands Bureau for Economic Policy Analysis
Content presentation • The Dutch economic development since early 2008 in European perspective • The most recent Dutch developments • The short-term outlook • Structural characteristics of the Dutch economy CPB Netherlands Bureau for Economic Policy Analysis
Netherlands lagging euro area in 2012 & 2013 101 GDP volume (2008Q1=100) 100 99 98 97 96 95 94 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 Euro area (17 countries) Netherlands CPB Netherlands Bureau for Economic Policy Analysis
Netherlands lagging its peers from 2011 onwards 101 GDP volume (2008Q1=100) 100 99 98 97 96 95 94 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 Euro area "north" Netherlands • “n orth ”: Belgium, France, Germany, Netherlands, Austria, Finland CPB Netherlands Bureau for Economic Policy Analysis
Showing up in unemployment 9 Unemployment rate 8 7 6 5 4 3 2 1 0 2008 2009 2010 2011 2012 2013 Euro area "north" Netherlands CPB Netherlands Bureau for Economic Policy Analysis
Lagging behind not due to exports .... 114 Exports of goods and services volume (2008Q1=100) 109 104 99 94 89 84 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 Euro area "north" Netherlands CPB Netherlands Bureau for Economic Policy Analysis
... but due to investments and .... 104 Gross fixed capital formation volume (2008Q1=100) 99 94 89 84 79 74 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 Euro area "north" Netherlands CPB Netherlands Bureau for Economic Policy Analysis
.... and private consumption 104 Private consumption volume (2008Q1=100) 102 100 98 96 94 92 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 Euro area "north" Netherlands CPB Netherlands Bureau for Economic Policy Analysis
Rise government consumption less than elsewhere 108 106 104 102 100 Government consumption (2008Q1=100) 98 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 Euro area "north" Netherlands CPB Netherlands Bureau for Economic Policy Analysis
Causes of the relative weak Dutch development? 1. Housing market? 2. Pension fund? 3. Fiscal policy? 4. Mood of consumers and producers? CPB Netherlands Bureau for Economic Policy Analysis
4. Mood of consumers and producers 110 100 90 80 70 Economic sentiment (January 2008=100) 60 2008 2009 2010 2011 2012 2013 Euro area "north" Netherlands • No major difference. Moreover hard to say whether pessimism caused weak development or weak development caused pessimism. CPB Netherlands Bureau for Economic Policy Analysis
3. Fiscal policy: consolidation measures 3,0 % GDP, not 2,5 cumulative 2,0 1,5 1,0 0,5 0,0 -0,5 2011 2012 2013 2014 2015 2016 2017 Other Rutte I Spring 2012 deal Rutte II 6 bn package (incl. Autumn 2013 deal) • Fiscal policy has been clearly restrictive in the Netherlands. CPB Netherlands Bureau for Economic Policy Analysis
3. Fiscal policy 2009 2010 2011 2012 2013 2014 2015 0 -1 -2 -3 -4 Structural budget balance, % GDP -5 Euro area "north" Netherlands • Netherlands was not the only country with austerity. International comparison is tough. Structural budget balance is a problematic indicator (big differences between Commission, OECD and IMF indicator). Indicator of Commission: average austerity in the Netherlands CPB Netherlands Bureau for Economic Policy Analysis
2. Pension funds 16,0 15,5 15,0 14,5 14,0 2009 2010 2011 2012 2013 Pension premium, % of gross wage • Pension funds bigger in the Netherlands. There are no international comparable data on pension premiums and pensions received. Pension premiums have been a drag on growth in the Netherlands. CPB Netherlands Bureau for Economic Policy Analysis
2. Pension funds Real disposable income, % change 2 0 -2 -4 -6 2009 2010 2011 2012 2013 Retired couple with small 2nd-pillar pension • Pension funds bigger in the Netherlands. There are no international comparable data on pension premiums and pensions received. Pension payments have clearly been a drag on growth in NL. CPB Netherlands Bureau for Economic Policy Analysis
1. Housing market 105 House price index (2008=100) 100 95 90 85 80 2008 2009 2010 2011 2012 2013 Euro area "north" Netherlands • Strong drop in Dutch house prices has had a negative impact on private consumption through wealth effects. CPB Netherlands Bureau for Economic Policy Analysis
1. Housing market 110 Construction production (2008=100) 105 100 95 90 85 80 75 70 2008 2009 2010 2011 2012 2013 Euro area "north" Netherlands CPB Netherlands Bureau for Economic Policy Analysis
Content presentation • The Dutch economic development since early 2008 in European perspective • The most recent Dutch developments • The short-term outlook • Structural characteristics of the Dutch economy CPB Netherlands Bureau for Economic Policy Analysis
Content presentation • The Dutch economic development since early 2008 in European perspective • The most recent Dutch developments: on its way up • The short-term outlook • Structural characteristics of the Dutch economy CPB Netherlands Bureau for Economic Policy Analysis
Recession has ended 2013 Q1 Netherlands GDP volume growth (q/q) 1,0 0,5 0,0 -0,5 -1,0 -1,5 2013Q3 2011Q1 2012Q1 2013Q1 Netherlands GDP volume growth (q/q) CPB Netherlands Bureau for Economic Policy Analysis
Unemployment no longer rising steeply 7,5 Unemployment rate 7,0 6,5 6,0 5,5 5,0 4,5 4,0 2011 2012 2013 Netherlands CPB Netherlands Bureau for Economic Policy Analysis
Housing market is bottoming out Existing home sales House prices (3m/3m (2007=100; s.a) %) 120 2 1 100 0 80 -1 60 -2 -3 40 1995 1998 2001 2004 2007 2010 2013 -4 2008 2009 2010 2011 2012 2013 Existing home sales House prices (3m/3m %) (2007=100; s.a) CPB Netherlands Bureau for Economic Policy Analysis
Consumer sentiment up Netherlands Consumer confidence indicator 2013M01 2013M04 2013M07 2013M10 0 -5 -10 -15 -20 -25 -30 -35 Netherlands Consumer confidence indicator CPB Netherlands Bureau for Economic Policy Analysis
Purchasing managers index very strong PMI manufacturing December 2013 UK Netherlands Germany Austria Ireland Italy Spain France 40 50 60 CPB Netherlands Bureau for Economic Policy Analysis
After 4 years drop, a purchasing power rise in 2014 2 1,5 1 0,5 0 -0,5 -1 -1,5 -2 -2,5 -3 2009 2010 2011 2012 2013 2014 Purchasing power (all households, median, %) CPB Netherlands Bureau for Economic Policy Analysis
Content presentation • The Dutch economic development since early 2008 in European perspective • The most recent Dutch developments • The short-term outlook • Structural characteristics of the Dutch economy CPB Netherlands Bureau for Economic Policy Analysis
Content presentation • The Dutch economic development since early 2008 in European perspective • The most recent Dutch developments • The short-term outlook: slow growth out of recession • Structural characteristics of the Dutch economy CPB Netherlands Bureau for Economic Policy Analysis
Outlook: slow growth out of recession 2012 2013 2014 2012 2013 2014 7,5 0,5 6,8 5,3 -1 -1,2 GDP Unemployment rate 2012 2013 2014 2012 2013 2014 2,8 2,5 1,3 -3,1 -3,3 -4,1 Consumer prices (hicp, %) … Government budget balance CPB Netherlands Bureau for Economic Policy Analysis
Content presentation • The Dutch economic development since early 2008 in European perspective • The most recent Dutch developments • The short-term outlook • Structural characteristics of the Dutch economy CPB Netherlands Bureau for Economic Policy Analysis
Content presentation • The Dutch economic development since early 2008 in European perspective • The most recent Dutch developments • The short-term outlook • Structural characteristics of the Dutch economy: strong CPB Netherlands Bureau for Economic Policy Analysis
Strong economy but long balance sheets households ... 350 300 250 200 150 100 50 0 Netherlands Euro area "north" United Kingdom Financial assets households, Percentage of GDP, 2012 Financial liabilities households, Percentage of GDP, 2012 CPB Netherlands Bureau for Economic Policy Analysis
... and vulnerable due to big banking sector ... Size banking sector (%GDP, 2011) 600 500 400 300 200 100 0 Netherlands Euro area "north" UK Size banking sector (%GDP, 2011) CPB Netherlands Bureau for Economic Policy Analysis
... and with a puzzling current account balance 10 8 6 4 2 0 -2 -4 Netherlands Euro area "north" United Kingdom Current account balance Percent of GDP , 2013 CPB Netherlands Bureau for Economic Policy Analysis
Strong competitive position Global competitiveness index 2013 ranking 14 12 10 8 6 4 2 0 Netherlands Euro area "north" United Kingdom Global competitiveness index 2013 ranking CPB Netherlands Bureau for Economic Policy Analysis
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