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developments in the Netherlands Investment briefing: The Dutch - - PowerPoint PPT Presentation

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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

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CPB Netherlands Bureau for Economic Policy Analysis

Macroeconomic developments in the Netherlands

Investment briefing: The Dutch residential market Dutch embassy in London Wim Suyker 22 January 2014

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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
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CPB Netherlands Bureau for Economic Policy Analysis

Netherlands lagging euro area in 2012 & 2013

94 95 96 97 98 99 100 101 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 GDP volume (2008Q1=100) Euro area (17 countries) Netherlands

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CPB Netherlands Bureau for Economic Policy Analysis

Netherlands lagging its peers from 2011 onwards

94 95 96 97 98 99 100 101 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 GDP volume (2008Q1=100) Euro area "north" Netherlands

  • “north”: Belgium, France, Germany, Netherlands, Austria, Finland
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CPB Netherlands Bureau for Economic Policy Analysis

Showing up in unemployment

1 2 3 4 5 6 7 8 9 2008 2009 2010 2011 2012 2013 Unemployment rate Euro area "north" Netherlands

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CPB Netherlands Bureau for Economic Policy Analysis

Lagging behind not due to exports ....

84 89 94 99 104 109 114 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 Exports of goods and services volume (2008Q1=100) Euro area "north" Netherlands

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CPB Netherlands Bureau for Economic Policy Analysis

... but due to investments and ....

74 79 84 89 94 99 104 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 Gross fixed capital formation volume (2008Q1=100) Euro area "north" Netherlands

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CPB Netherlands Bureau for Economic Policy Analysis

.... and private consumption

92 94 96 98 100 102 104 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 Private consumption volume (2008Q1=100) Euro area "north" Netherlands

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CPB Netherlands Bureau for Economic Policy Analysis

Rise government consumption less than elsewhere

98 100 102 104 106 108 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 Government consumption (2008Q1=100) Euro area "north" Netherlands

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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?
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CPB Netherlands Bureau for Economic Policy Analysis

  • 4. Mood of consumers and producers
  • No major difference. Moreover hard to say whether pessimism

caused weak development or weak development caused pessimism.

60 70 80 90 100 110 2008 2009 2010 2011 2012 2013 Economic sentiment (January 2008=100) Euro area "north" Netherlands

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CPB Netherlands Bureau for Economic Policy Analysis

  • 3. Fiscal policy: consolidation measures
  • Fiscal policy has been clearly restrictive in the Netherlands.
  • 0,5

0,0 0,5 1,0 1,5 2,0 2,5 3,0 2011 2012 2013 2014 2015 2016 2017 % GDP, not cumulative

Other Rutte I Spring 2012 deal Rutte II 6 bn package (incl. Autumn 2013 deal)

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CPB Netherlands Bureau for Economic Policy Analysis

  • 3. Fiscal policy
  • 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

  • f Commission: average austerity in the Netherlands
  • 5
  • 4
  • 3
  • 2
  • 1

2009 2010 2011 2012 2013 2014 2015 Structural budget balance, % GDP Euro area "north" Netherlands

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CPB Netherlands Bureau for Economic Policy Analysis

  • 2. Pension funds
  • 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.

14,0 14,5 15,0 15,5 16,0 2009 2010 2011 2012 2013 Pension premium, % of gross wage

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CPB Netherlands Bureau for Economic Policy Analysis

  • 2. Pension funds
  • 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.

  • 6
  • 4
  • 2

2 2009 2010 2011 2012 2013

Real disposable income, % change

Retired couple with small 2nd-pillar pension

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CPB Netherlands Bureau for Economic Policy Analysis

  • 1. Housing market
  • Strong drop in Dutch house prices has had a negative impact on

private consumption through wealth effects.

80 85 90 95 100 105 2008 2009 2010 2011 2012 2013 House price index (2008=100) Euro area "north" Netherlands

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CPB Netherlands Bureau for Economic Policy Analysis

  • 1. Housing market

70 75 80 85 90 95 100 105 110 2008 2009 2010 2011 2012 2013 Construction production (2008=100) Euro area "north" Netherlands

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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
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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
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CPB Netherlands Bureau for Economic Policy Analysis

Recession has ended 2013 Q1

  • 1,5
  • 1,0
  • 0,5

0,0 0,5 1,0 2011Q1 2012Q1 2013Q1

Netherlands GDP volume growth (q/q)

Netherlands GDP volume growth (q/q) 2013Q3

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CPB Netherlands Bureau for Economic Policy Analysis

Unemployment no longer rising steeply

4,0 4,5 5,0 5,5 6,0 6,5 7,0 7,5 2011 2012 2013 Unemployment rate Netherlands

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CPB Netherlands Bureau for Economic Policy Analysis

Housing market is bottoming out

40 60 80 100 120

1995 1998 2001 2004 2007 2010 2013

Existing home sales (2007=100; s.a)

Existing home sales (2007=100; s.a)

  • 4
  • 3
  • 2
  • 1

1 2

2008 2009 2010 2011 2012 2013

House prices (3m/3m %)

House prices (3m/3m %)

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CPB Netherlands Bureau for Economic Policy Analysis

Consumer sentiment up

  • 35
  • 30
  • 25
  • 20
  • 15
  • 10
  • 5

2013M01 2013M04 2013M07 2013M10

Netherlands Consumer confidence indicator

Netherlands Consumer confidence indicator

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CPB Netherlands Bureau for Economic Policy Analysis

Purchasing managers index very strong

40 50 60 France Spain Italy Ireland Austria Germany Netherlands UK

PMI manufacturing December 2013

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CPB Netherlands Bureau for Economic Policy Analysis

After 4 years drop, a purchasing power rise in 2014

  • 3
  • 2,5
  • 2
  • 1,5
  • 1
  • 0,5

0,5 1 1,5 2 2009 2010 2011 2012 2013 2014 Purchasing power (all households, median, %)

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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
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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
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CPB Netherlands Bureau for Economic Policy Analysis

Outlook: slow growth out of recession

  • 1,2
  • 1

0,5 2012 2013 2014 GDP 5,3 6,8 7,5 2012 2013 2014 Unemployment rate 2,8 2,5 1,3 2012 2013 2014 Consumer prices (hicp, %)

  • 4,1
  • 3,1
  • 3,3

2012 2013 2014 Government budget balance …

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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
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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
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CPB Netherlands Bureau for Economic Policy Analysis

Strong economy but long balance sheets households ...

50 100 150 200 250 300 350 Netherlands Euro area "north" United Kingdom Financial assets households, Percentage of GDP, 2012 Financial liabilities households, Percentage of GDP, 2012

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CPB Netherlands Bureau for Economic Policy Analysis

... and vulnerable due to big banking sector ...

100 200 300 400 500 600 Netherlands Euro area "north" UK

Size banking sector (%GDP, 2011)

Size banking sector (%GDP, 2011)

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CPB Netherlands Bureau for Economic Policy Analysis

... and with a puzzling current account balance

  • 4
  • 2

2 4 6 8 10 Netherlands Euro area "north" United Kingdom Current account balance Percent of GDP , 2013

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CPB Netherlands Bureau for Economic Policy Analysis

Strong competitive position

2 4 6 8 10 12 14 Netherlands Euro area "north" United Kingdom

Global competitiveness index 2013 ranking

Global competitiveness index 2013 ranking

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CPB Netherlands Bureau for Economic Policy Analysis

Strong institutions and good infrastructure

5 10 15 20 25

Netherlands Euro area "north" United Kingdom

Institutions, 2013, ranking 1 2 3 4 5 6 7 8 9

Netherlands Euro area "north" United Kingdom

Infrastructure, 2013, ranking

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CPB Netherlands Bureau for Economic Policy Analysis

Efficient market and education, highly innovative

2 4 6 8 10 12 14

Netherlands Euro area "north" United Kingdom

Efficiency, 2013, ranking 2 4 6 8 10 12

Netherlands Euro area "north" United Kingdom

Innovation, 2013, ranking

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CPB Netherlands Bureau for Economic Policy Analysis

As a result: High productivity

35 36 37 38 39 40 41 42 Netherlands Euro area "north" United Kingdom Gross domestic product based on purchasing-power-parity (PPP) per capita GDP ,1000 $, 2013

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CPB Netherlands Bureau for Economic Policy Analysis

Thank you

  • For more information see

www.cpb.nl

  • Sources used:

– Eurostat (GDP, unemployment, house price, financial assets and liabilities, construction production) – ECFIN (economic sentiment, consumer confidence) – Ameco (structural budget balance) – Markit (PMI) – IMF WEO (GDP per capita) – CPB (forecast December 2013; Dutch consolidation measures). – GCI Global Competitiveness Report 2013-2014.