
This article was last updated on January 16, 2025
Canada: Oye! Times readers Get FREE $30 to spend on Amazon, Walmart…
USA: Oye! Times readers Get FREE $30 to spend on Amazon, Walmart…
Table of Contents
Dutch economy is doing better than the German one: ‘Less dependent on industry’
The German economy shrank last year for the second year in a row, was announced today. In the meantime, the Dutch economy is doing a lot better. Our statistics agency will not release the annual figure until next month, but in the third quarter of 2024 there was growth of 1.7 percent on an annual basis.
For decades it was said that when Germany sneezes, the Netherlands catches a cold. In other words: the Dutch economy suffers when things go badly in Germany. But that seems less the case in recent years.
The German economy has been struggling for years, while the Dutch economy continues to grow. ING economists Bert Colijn and Carsten Brzeski previously calculated that the Dutch economy grew by no less than 11.9 percent between the end of 2017 and mid-2024, while the German economy grew by only 1.2 percent.
So a big difference. “This is partly because the Dutch economic model is structured differently than the German one,” according to the ING economists. “The Dutch economy is less dependent on traditional manufacturing industries. As a result, our economy is currently less threatened by Chinese competition.”
China has always been a major sales market for German industry, for example for car manufacturers such as Volkswagen and BMW. But the tables are slowly being turned, ING sees. “China is becoming a major rival in the markets for quintessential German products, currently mainly cars.”
Less affected
The Netherlands does supply parts to the German car industry, which is currently struggling, but the car sector is much less important for the Dutch economy as a whole than for Germany. “However, the Netherlands supplies a relatively large amount to a number of German industrial sectors that have been less affected,” ING said. “Consider, for example, the electronics, food and mechanical engineering sectors, which have survived reasonably well.”
The Central Planning Bureau notes that Germany is also becoming less important to the Dutch economy in general. “You see a trend that Germany is still an important trading partner, but that its importance is slowly decreasing,” says CPB economist Gerdien Meijerink.
Economy more diverse
In 1995, exports to Germany still accounted for 7.7 percent of the Dutch economy, but in 2020 this had fallen to 6.4 percent. “The Dutch economy is very diverse and relies on services and a high-quality knowledge economy,” says Meijerink. “So if exports are not going well somewhere, that is not so bad.”
According to her, other countries now have a stronger link with the German car industry. “There has been a shift to Eastern Europe. You could say: it is no longer the case that when the German car industry sneezes, the Netherlands catches a cold. That relationship has become a lot less.”
Not immune
ING does warn that the Netherlands is “not becoming immune to a German virus”. “The specific weakness of the current German economy therefore affects the Netherlands less, but there is a good chance that the German misery will still have consequences for the Netherlands. Especially if the current stagnation in Germany starts to affect more and more sectors.”
Unemployment in Germany, for example, is still relatively low at 3.4 percent. “If German weakness causes unemployment to rise further, consumers may become more cautious.” And that could affect Dutch exports to Germany more broadly.
Be the first to comment