The Netherlands: Moving Sideways

On this page we present the salient features of the economy of the Netherlands since the onset of the Great Recession in historical perspective, where the comparison is with the two prior business cycles that we are able to identify given available data.

The first figure below shows the path of Real GDP and the estimated trend component (see the page on Identifying European Business Cycles) which is the basis for our analysis.

The Great Recession was felt in the Netherlands  hard which experienced roughly a five percent decline in GDP at the bottom.  More troubling is that they have  not recovered very well. The following graph plots the percentage change in Real GDP for the Netherlands.

Looking at the recovery from the trough shows much the same message.

Consumption in the Netherlands stayed remarkably constant for a while and now seems to be declining again. Capital formation has still not recovered nor has residential capital formation.

Exports collapsed sharply but now have recovered as have imports.

The Role of Government

The Netherlands entered the Great Recession with a manageable stock of outstanding debt, a position that enabled them to increase spending. The figure below shows the response as measured by the percentage change in government consumption from the peak of the cycle to the present. This essentially captures the level of Government spending.

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