1. The Dutch Economy in 2013
Outlooks, Problems and Solutions
Peter Machielse
19th December 2012

2. List of abbreviations
CPB
Centraal Plan Bureau (Dutch Bureau for Economic Policy Analysis)
DNB
De Nederlandsche Bank (Dutch Central Bank)
CEP
Centraal Economisch Plan (spring edition of the CPB’s economic outlook)
MEV
Macro Economische Verkenning (autumn edition of the CPB’s economic outlook)
EC
European Commission
IMF
International Monetary Fund
OECD
Organization for Economic Co-operation and Development
EMU
European Monetary Union
BTW
Belasting Toegevoegde Waarde (Dutch equivalent of Value Added Tax)

3. Expectations for the Dutch economy in 2013
Different Dutch and foreign institutes publish their expectations for the Dutch economy. The most
authoritative institute in the Netherlands is the CPB (Centraal Plan Bureau). This institute has a long
tradition in predicting economical outlooks and it is the main source where the Dutch government relies
on while making their budgetary plans. Another major role is assigned to the DNB (De Nederlandsche
Bank) which also publishes an economical forecast. These two outlooks can be considered as the most
leading in the Dutch policy making process and are regarded as commonly understood facts (den Butter,
2006). The latter predicts an economic downturn of -0,6 % for the year of 2013.1 The CPB publishes an
economic outlook four times a year. The spring prediction which is abbreviated as CEP (Centraal
Economisch Plan) and the autumn prediction which is abbreviated as MEV (Macro Economische
Verkenning) are the most important CPB economic outlook publications each year. After these
publications an update of both predictions is published each year in June and December.2 The MEV for
20133 calculates an economical growth of 0,75 % for the year of 2013. This was rectified to -0,5% in the
December 2012 outlooks. 4
The CPB and the DNB are the most authoritative sources on economical outlooks in the Netherlands,
however they are not the only institutes doing so. Dutch banks also publish their predictions which over
2012 seemed to be more accurate than the ones mentioned above.5 Three of the four biggest banks6 in
the Netherlands predict the GDP (Gross Domestic Product) development for 2013 as followed: ING -0,5%7,
ABN AMRO 0,5%8 Rabobank 0,25%9
All the above organizations and institutions are from Dutch origin. When looking at the predictions
concerning the economic outlooks in the past, the domestic sources seemed to be the most accurate.10
Among the international organizations, the EC (European Commission) can be regarded as the most
influential institute on the Dutch policy making process. The EC publishes outlooks for the Dutch economy
twice a year (as they do for all EMU member states) and predicts the growth for 2013 at 0,3%11. The IMF
(International Monetary Fund) predicts 0,4 %12 and the OECD (Organization for Economic Co-operation
and Development) predicts 0,2%.13
Current problems in the Dutch economy
Probably the most discussed problem within the Dutch economy and the cause of the current cuts is the
large public debt that was caused by financial crisis of 2008-2009 and the European sovereign-debt crisis
within the EMU (European Monetary Union) which started in 2010. In fact one can argue that the Dutch
economy is even more vulnerable to global economic (and especially European) problems due to the open
character of the Dutch economy. The Dutch rely heavily on their exports to realize an increase in GDP.
Netherlands is almost like no other country dependent on the export to other Euro zone countries (60%).
1
De Nederlandsche Bank. Economische Ontwikkelingen en Vooruitzichten. December 2012 Nr. 4.
http://www.cpb.nl/kortetermijnramingen
3
Macro Economische Verkenning 2013 Sdu uitgevers september 2012.
4
Centraal Planbureau: Decemberraming 2012. Economische vooruitzichten 2013. December 2012
5
http://www.cpb.nl/artikel/veelgestelde-vragen-programma-macro#vraag_2.3
6
http://www.nrc.nl/nieuws/2012/10/03/vier-grootste-nederlandse-banken-doorstaan-europese-stresstest/
7
ING maandbericht economie november 2012
8
ABN AMRO Economische ramingen Economisch Bureau Macro Research. 21 August 2012
9
Rabobank Outlook 2013. Low growth is the new reality. November 2013.
10
http://www.cpb.nl/artikel/veelgestelde-vragen-programma-macro#vraag_2.3
11
European Economic Forecast. autumn 2012
12
IMF World Economic Outlook: Coping with High Debt and Sluggish Growth. October 2012.
13
th
OECD Economic outlook no. 92 27 November 2012.
2

4. A lingering crisis in the Euro zone therefore limits the capabilities for the Dutch to increase their GDP in
the short term.14 The deficit for 2011 came to 4,5% of the GDP and despite the measures taken by the
government (whom tries to follow the European budgetary 3 % rule to avoid an European Commission
penalty) to reduce the deficit, it turns out to be -3,8% of the GDP for 2012 and -3,3% of the GDP for
2013.15 The government had to do something about their public debt because the current interest is
about €10 billion each year with the current debt of € 447 Billion which is 71,9% of the country’s GDP.16
However the measures taken by the government (16 billon of cuts17) to keep the public debt manageable
are not without consequences for the economical growth. Partly due to the cuts in governmental
spending the level of consumption is decreasing which causes a decrease or a negligible growth of the
Dutch GDP during 2012-2013 (see outlooks above). Therefore the main concern is to find a balance
between cutting governmental expenses and spare economical growth. When governmental expenses are
cut too much, the economical growth is at stake.
To get more into detail, below a short description of the major problems occurred due to the stagnating
economy and the related decline in private spending is pointed out. One of the most important reasons
for a decline in private spending is the downturn trend of the housing market. The average value of a
house will fall by 21%18-2519, over the period from 2008-2014, which leave people with a negative home
equity20. The outlooks for the unemployment rates have their resonance on public spending as well. Not
only more people are getting unemployed21 (what also causes more governmental expenses on the
welfare system), also people who are still working will be triggered to save their money instead of
spending it. Furthermore the pensions are under pressure to fulfill their coverage due to the economic
downturn and the growing amount of the elderly. Therefore payments go down and contributions go up,
so both the working and retired lose some of their purchasing power. Also the increasing healthcare22
costs make the policy makers concerned, because the expenses of 13% of the GDP in 2010 will increase to
22% in 2040.23 Those negative economical outlooks turn the consumer confidence into historically low
levels comparable to the early 80’s and the burst of the Internet bubble in 2003.24 While the bad housing
market, unemployment rates, pensions, increasing healthcare costs, and the consumer confidence are the
main points of concern, other measures and issues can damage the public spending as well. To mention a
few: increasing BTW (Value Added Tax), increasing insurance tax, wage moderation in the public sector, 25
26
a loss of income by the government due to the growing unemployment27 and a growing amount of
elderly compared to the working force.28
14
De Nederlandsche Bank: Economische Ontwikkelingen en Vooruitzichten. December 2012, No: 4
Centraal Planbureau: Decemberraming 2012. Economische vooruitzichten 2013. December 2012
16
http://www.rijksoverheid.nl/nieuws/2012/09/18/miljoenennota-2013-schokbestendige-overheidsfinancien-en-eenveerkrachtige-economie.html
17
Actualisatie Analyse economische effecten financieel kader regeerakkoord.
18
De Nederlandsche Bank: Economische Ontwikkelingen en Vooruitzichten. December 2012, No: 4
19
NRC Handelsblad, Tuesday 18th December 2012, P1.
20
European Commision: European Economic Forecast. Autumn 2012.
21
http://www.volkskrant.nl/vk/nl/3184/opinie/article/detail/3364169/2012/12/15/Waar-blijft-masterplan-tegen-dewerkloosheid.dhtml
22
Actualisatie Nederlandse economie tot en met 2017 (verwerking Regeerakkoord)
23
Centraal Planbureau: Trends in Gezondheid en Zorg. June 2011
24
De Nederlandsche Bank: Economische Ontwikkelingen en Vooruitzichten. December 2012, No: 4
25
De Nederlandsche Bank: Economische Ontwikkelingen en Vooruitzichten. December 2012, No: 4
26
European Commision: European Economic Forecast. Autumn 2012.
27
Centraal Planbureau: Decemberraming 2012. Economische vooruitzichten 2013. December 2012
28
Centraal Planbureau: Trends in Gezondheid en Zorg. June 2011
15

5. What the government should do
A further integration within the EMU is not the right solution to solve the European sovereign debt crisis
in the long run. Despite the successes of the European internal market during the last 20 years, a further
European Integration does not seems to help the Euro zone into a brighter future. With a further
integration (e.g. a collectivization of the countries’ public debts), the sting of the market would be taken
away from the weaker European countries needed to get their national finances in line, because the
stronger countries will pay the bill. However a collapse of the Euro zone can be catastrophic for the Dutch
economy so measures to save it should be taken, but the Dutch government should try anything possible
to put the weaker states back on track.
The government should be reluctant to invest in the economy. Even though investments can solve the
pain on the short term, the risk will occur that the governmental finances become unmanageable due to
the rising interest. Therefore I would suggest adhering as long as possible to the European requirement
that the deficit should not transcend the 3% of the GDP. Once leaving the 3% rule, leaving the newly set
target as well would be a next step into an unmanageable financial situation. However when the economy
is supposed to damaged irreparable, the 3% should be ignored for a short period.
Furthermore I would suggest being reticent on raising the costs for the private companies. Those
companies are the real pillar where the economy depends on and the way to increase the country’s GDP
in the near future. An increase in wages due to an increase in welfare costs will result in a private sector
which is less capable to transfer creativity and ideas into employment and welfare. The labor market
therefore should be made more flexible. With a global market that will be more and more dynamic during
the next decades, companies should be more flexible to anticipate rapidly on the fast changes of the
future. The Dutch tell themselves to be a nation of export. This is true when looking at Europe, but there
is a lot to win when we consider the activity on the global market. With the bad economical outlooks for
the U.S. and Europe, the Dutch government should invest in trading and strengthen the ties with
upcoming markets in especially Asia and Latin America.

6. Bibliography
ABN AMRO: Economische ramingen, Economische Bureau Macro Research. 13th September 2012.
Butter, F. A. G. den (2006). The Industrial Organization of Economic Policy Preparation in the Netherlands.
Version 23th January 2006. (http://staff.feweb.vu.nl/fbutter/berlijnpap.pdf)
Centraal Planbureau: Actualisatie Nederlandse Economie tot en met 2017 (verwerking regeerakkoord).
29th November 2012.
Centraal Planbureau: Actualisatie Analyse Economische Effecten Financieel Kader Regeerakkoord. 12th
November 2012.
Centraal Planbureau: Decemberraming 2012. Economische vooruitzichten 2013. December 2012
Centraal Planbureau: Herstelgroei na 2012 Centraal Economisch Plan 2012 March 2012.
Centraal Planbureau: Juniraming 2012. De Nederlandse Economie tot en met 2017, inclusief
Begrotingsakkoord 2013. CPB Policy brief. June 2012.
Centraal Planbureau: Macro Economische Verkenning 2013. September 2012.
Centraal Planbureau: Trends in Gezondheid en Zorg. June 2011
De Nederlandsche Bank: Economische Ontwikkelingen en Vooruitzichten. December 2012, No 4.
De Nederlandsche Bank: Economische Ontwikkelingen en Vooruitzichten. June 2012. No 3.
De Nederlandsche Bank: Overzicht Financiële Stabiliteit. Voorjaar 2012, No 15.
European Commission: European Economic Forecast. Autumn 2012.
European Commission: European Economic Forecast. Spring 2012.
European Central Bank: Monthly Bulletin. December 2012.
ING: Maandbericht Economie. November 2012.
International Monetary Fund: World Economic Outlook October 2012. Coping with High Debt and Sluggish
Growth.
NRC Handelsblad: Tuesday 18th December 2012. P1.
OECD: Economic Outlook No 92. 27th November 2012.
Rabobank: Economic Update The Netherlands. Rabobank Economic Research Department. 4th December
2012.
Rabobank: Economisch Kwartaalbericht 2012.
Rijksoverheid: Miljoenennota 2013. 18th September 2012.
Rabobank: Outlook 2013. Lower Growth is the New Reality. November 2012.

7. Websites
ec.europa.eu
European Commission
www.abnamro.nl
ABN AMRO Bank
www.cbs.nl
Centraal Bureau voor de Statistiek
www.cpb.nl
Centraal Planbureau
www.dnb.nl
De Nederlandsche Bank
www.ecb.int
European Central Bank
www.imf.org
International Monetary Fund
www.ing.nl
ING
www.oecd.org
Organisation for Economic Co-operation and Development
www.nrc.nl
NRC Handelsbald
www.rabobank.nl
Rabobank
www.rijksoverheid.nl
Dutch central government
www.volkskrant.nl
Volkskrant