Netherlands - Economy

Economy

The Netherlands has a developed economy and has been playing a special role in the European economy for many centuries. Since the 16th century, shipping, fishing, trade, and banking have been leading sectors of the Dutch economy. The Netherlands is one of the world's 10 leading exporting countries. Foodstuffs form the largest industrial sector. Other major industries include chemicals, metallurgy, machinery, electrical goods, and tourism. Examples include Unilever, Heineken, financial services (ING), chemicals (DSM), petroleum refining (Shell), electronical machinery (Philips, ASML) and car navigation TomTom.

The Netherlands has the 17th largest economy in the world, and ranks 10th in GDP (nominal) per capita. Between 1997 and 2000 annual economic growth (GDP) averaged nearly 4%, well above the European average. Growth slowed considerably from 2001 to 2005 with the global economic slowdown, but accelerated to 4.1% in the third quarter of 2007. Inflation is 1.3%, and unemployment is at 4.0% of the labour force. By Eurostat standards, unemployment in the Netherlands is at 4.1% (April 2010) – the lowest rate of all European Union member states. But in Q3 and Q4 2011, the Dutch economy contracted by 0.4% and 0.7%, respectively due to European Debt Crisis, while in Q4 the Eurozone economy shrunk by 0.3%. The Netherlands also has a relatively low GINI coefficient of 0.326. Despite ranking only 7th in GDP per capita, UNICEF ranked the Netherlands 1st in child well-being. On the Index of Economic Freedom Netherlands is the 13th most free market capitalist economy out of 157 surveyed countries.

Amsterdam is the financial and business capital of the Netherlands. The Amsterdam Stock Exchange (AEX), part of Euronext, is the world's oldest stock exchange and is one of Europe's largest bourses. It is situated near Dam Square in the city's centre. As a founding member of the euro, the Netherlands replaced (for accounting purposes) its former currency, the "gulden" (guilder), on 1 January 1999, along with 15 other adopters of the euro. Actual euro coins and banknotes followed on 1 January 2002. One euro was equivalent to 2.20371 Dutch guilders. However, in the Caribbean Netherlands, the U.S. dollar is used instead of the euro.

The Netherlands' location gives it prime access to markets in the UK and Germany, with the port of Rotterdam being the largest port in Europe. Other important parts of the economy are international trade (Dutch colonialism started with cooperative private enterprises such as the VOC), banking and transport. The Netherlands successfully addressed the issue of public finances and stagnating job growth long before its European partners. Amsterdam is the 5th busiest tourist destination in Europe with more than 4.2 million international visitors. Since the enlargement of the EU large numbers of migrant workers have arrived in the Netherlands from central and eastern Europe.

The country continues to be one of the leading European nations for attracting foreign direct investment and is one of the five largest investors in the United States. The economy experienced a slowdown in 2005, but in 2006 recovered to the fastest pace in six years on the back of increased exports and strong investment. The pace of job growth reached 10-year highs in 2007. The Netherlands moved up from the 11th position in the Global Competitiveness Index to the 9th position in 2007.

One of the largest natural gas fields in the world is situated near Slochteren. Exploitation of this field resulted in a total revenue of €159 billion since the mid 1970s. With just over half of the reserves used up and an expected continued rise in oil prices, the revenues over the next few decades are expected to be at least that much.