Why is the strong Dutch economy slowing down? | Netherlands Economy | Econ

The Netherlands boasts a robust economy, ranking as the 17th largest in the world. Its total economic output, also known as nominal GDP, reached an impressive $1.013 trillion in 2023. Not only is the Netherlands wealthy as a nation, but the Dutch population is also among the richest in the world, with a GDP per capita of $72,973. However, this wealth can sometimes be deceptive, and there are valid reasons for this notion.

The big picture is that Europe's economy has achieved a recovery after the global financial crisis, but it hasn't fully bounced back. Among the European nations, the Dutch economy has experienced the slowest growth. One major factor contributing to this sluggishness is the weakness in consumer spending and household consumption.

Moreover, it became the first country to prioritize climate over GDP. This raises the question: can a rich nation be happy if its economy stops growing?

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#economy #dutch #recession #europe

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[econYT]

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[Falangaz]

Did he really just mention Spyker rather than ASML!?

[Rhgeyer]

Some group of economists have projected that both the U.S and parts of Europe could slip into a recession for a portion of 2023. A global recession, define as a contraction in annual global per capita income, is more rare because china and emerging markets often grow faster than more developed economies. Essentially the world economy is considered to be in recession if economic growth falls behind population growth.

[Celis.C]

11 minutes is a short time to discuss things. It can't be avoided that some nuance gets lost in the process of summary.
That being said, the Netherlands faces a combination of multiple crises that compound one another.
- An aging population: 47% of all households in NL are 55+ y.o.; 13% of all households are 75+ y.o. These numbers are predicted to be 51% and 19% respectively by 2035. *
- 92% of all 75+ people live independently, so not in a care home, vs 83% in 1990. Of all 75+ people, 43% live alone *
- The nature in the Netherlands is suffering extremely under the burden of acidification of the soil, mainly due to nitrogen compounds from chiefly agricultural sources. Hence the 'stikstofcrisis', aka 'nitrogen crisis'. There is a 30+ year history behind this. The country's reached a point where they simply can no longer kick the can.
- There are two 'markets' for those who have to rent: either a 10-20 year wait list for 'social housing' with affordable rent, or "the free sector" that these days effectively starts at €900/month purely for the rent, that's not counting gas, water, electricity etc. It is very common to find a half-decent apartment STARTING at €1200 or higher. These rent prices increased the demand for home ownership, especially when interest rates were still low (it's now around 4-4.5%, up from ~1.3% two years ago).
- The high cost of land sees a sharp rise in luxury housing, because social and affordable housing are literally not profitable to build for anymore.

And that's just a drop in the bucket of various factors contributing to the housing dilemma's in the Netherlands. Many of them can be traced back to government policies, so hopefully a fresh new direction can help the country get back on its feet. At the time of writing, the Dutch government has fallen (again) with new elections slated for November 2023.

[hoobabi]

I live in the Netherlands and this is a nice video. @Celis.C already adds a lot of nuance to this video but one point I always miss in discussions of high prices in housing is the sheer amount of investors (both individual and companies) who often use limited availability due to a lack of land to make a killing. In 2022 alone, investors bought 88, 000 houses. Blackrock alone owns around a 100k of units in Europe and owns about 15 BILLION worth of property in the Netherlands. What bothers me is this is pretty much not visible and then people start finding scapegoats e.g. young people, single people, immigrants etc when the investors are far more to blame.

[Jasper_]

“Automation alone won’t fix problems like labour shortages” (10:35) - that is exactly what automation fixes. Same output with less labour input.

[DAH]

As a Dutchman I congratulate you on the video.
But one important sidenote is that in the video you mention that the peak of inflation was the highest compared to other western economies at a staggering 14.5%, however the Dutch CBS (central bureau for statistics) admitted that their inflation models indicated an unrealistically high inflation rate. This is because the models were created under the assumption that every one would have a new energy contract every month. This is obviously not the case and if you would filter this out you would get an inflation rate of roundabout 8%. This is still relativily high, but way less than the still official number of 14.5%.

[PbPomper]

The main problem is that our government hasn't acted for multiple decades on issues like nitrogen emissions and the mortgage tax rebates which were already clear back then. Instead they kept and kept postponing and waited until the bomb burst.

[lkruijsw]

Naming old Philips and forgetting ASML😂

[TheSuperappelflap]

I always love when English or American people make videos like this. They're always full of facts and yet completely miss the point.
Let me give you the real reasons for the economic issues we are having.
First is massive wealth inequality. We may have fairly low wage inequality compared to other western countries, but the highest wealth inequality of all. Generational wealth rules everything and social mobility is practically 0.
Next is stagnant wages. Real wage growth has been deep in the negatives since the early 90s. I make the same amount of money my father did, but my money is worth less than half of what his was due to inflation.
Then there is corporate tax evasion. Profit and dividend taxes are very low and there is a lot of room for creative accounting, so that businesses that make billions in profit basically dont pay any taxes.
Divestment from the Dutch economy is also a big issue. In 2008, during the financial crisis, it was estimated that an amount of money equal to 80% of the GDP was moved out of the country. In one year. That is money that is no longer in our economy, slowing economic growth.

If we didnt have all the problems mentioned above, there wouldnt be a cost of living crisis. The problem isnt that there isnt enough money, its just not ending up in peoples hands. With a population of 18M people, and a GDP of 1 trillion USD, that would mean on average the economic turnover is 55K USD for every man, woman and child. But only about 10 million people actually work. So that would average 100K USD per working head of population. That would be plenty to buy a house and afford to eat. But the median income is about 40K USD, not Euro as mentioned in the video. Wheres all the other money going? Well, to the rich, and to tax dodging multinationals.

We also dont have a housing crisis. There are 8 million homes for 18 million people. Thats about 2, 25 persons per home. The average home is easily large enough for 2, 25 people. What we have, again, is a housing distribution crisis, just like we have an income and wealth distribution crisis.
The reason housing is so expensive isnt that there arent enough homes. The reason is the government purposely created a very attractive climate for international investors on our housing market, to drive up property values and thereby income from property taxes. They dont care that this makes housing unaffordable for native people.

[rjdverbeek]

Around 60% of the landarea of the Netherlands is used for agriculture, but it only represents a small part of GDO. With just a small reduction in area for live stock more then enough room becomes available for housing projects.

[GerbenWulff]

The Netherlands has negative natural population growth (births-deaths). The driving force behind the high demand for housing is migration, which you chose not to mention. The government recently collapsed over the migration issue. Too many people also puts too much pressure on the environment.

[jaja]

Most important thing is that the Netherlands is heavily dependant on world trade which is taking huge hits. So its kinda normal to be in a recession

[mrRobotX_x]

bureaucratic regulations concerning nitrogen emissions from different economic activities, such as construction, agriculture, and transportation, have been notably stringent. These regulations play a vital role in safeguarding the environment, but they can also present challenges for businesses and projects that generate nitrogen emissions. Adhering to these rules may result in project delays or additional costs.... the netherlands has been grappling with a housing supply shortage, particularly in urban areas. The slow approval process for construction permits can significantly impede the progress of new housing projects, ultimately limiting the availability of homes and causing property prices to rise....Van der Ploeg, Jan Douwe. "Farmers’ upheaval, climate crisis and populism." The Journal of Peasant Studies

[h.waltercabrales]

The war in Ukraine has had a significant impact on energy prices in the Netherlands. This has led to higher energy bills for businesses and households.
The government has imposed a windfall tax on energy companies, and it is also providing financial assistance to low-income households. Everyone is hoping that the war in Ukraine will end soon, which would help to bring energy prices down.

[MijnAfspeellijst]

Privatisation of the dutch housing market around 10 years ago is a big reason for the stagnation of housing construction

[colbr]

Very interesting report, one item that wasn't mentioned is the Netherlands is implementing European regulations in regard to the Nitrogen levels. Not it's own guidelines as was implied during the report.

[viaceslavkiptilov]

Out of all countries lived/visited - The Netherlands is one exemplary country in many aspect. Having a Market and in the same time providing the safety nets, technology, advanced research, greenhouses, and a multicultural environment. A Lovely place indeed!

[kennethvenezia]

So essentially, what's pretty much happening everywhere in the developed world is happening in the Netherlands as well.

[MrPastaTube]

I think a society generally should adopt environmental restrictions when the cost of living is declining, not when it's rising.