Economy of the Netherlands

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On the Index of Economic Freedom, the Netherlands is the 13th most laissez-faire capitalist economy out of 157 surveyed countries. At the time of writing the Netherlands is the 16th largest economy of the world. (see: List of countries by GDP (nominal)) Between 1998 and 2000 annual economic growth (GDP) averaged nearly 4%, well above the European average. Growth slowed considerably in 2001-05 as part of the global economic slowdown. 2006 however, showed a promising 2.9% growth. Yearly growth accelerated to 4.2% in the third quarter of 2007. Inflation is 1.3% and is expected to stay low at about 1.5% in the coming years.

According to the definititon used by the Dutch Statistics Agency CBS, unemployment is currently at 4.0% of the labor force. By Eurostat standards however, unemployment in the Netherlands is at only 2.9% - the lowest rate of all EU member states.

The Netherlands is a founding member of the European Union, the OECD and the World Trade Organization



The Netherlands has a prosperous and open economy, which depends heavily on foreign trade. The economy is noted for stable industrial relations, fairly low unemployment and inflation, a sizable current account surplus, and an important role as a European transportation hub. Industrial activity is predominantly in food processing, chemicals, petroleum refining, and electrical machinery. A highly mechanised agricultural sector employs no more than 2% of the labour force but provides large surpluses for the food-processing industry and for exports. The Netherlands, along with 11 of its EU partners, began circulating the euro currency on 1 January 2002. The country is one of the leading European nations for attracting foreign direct investment.[3]

The stern financial policy has been abandoned in 2009 on account of the current credit crises. The relatively large banking sector was partly nationalised and bailed out through government interventions. Large unemployment, double the current rate of 4% is expected since the Netherlands is an open economy. A large deficit in government accounts of 5% is expected for 2009. The government wants to stimulate the economy by accelerating already planned projects. Fundamental reforms for long term recovery will be implemented as well.[citation needed]

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