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Dutch economy faces crucial fork at beginning of new year

09. January 2020, 16:22 Uhr

So far, it has been one of the economies in the eurozone keeping up relatively well in the face of adverse developments in global manufacturing. But of late, the Dutch economy has caught the industrial flu, too, and faces a crucial parting of ways at the beginning of the new year: Whether there will be a sustainable truce in US-sponsored protectionism or not.

One of the world’s leading exporters, the Netherlands have been being particularly dependent on free trade and global supply chains throughout their history. That said, it’s all the more remarkable that by contrast to its big neighbour Germany, the Dutch economy was sporting relatively decent rates of growth both in terms of manufacturing, exports, and GDP over the greater part of the past year. But right towards the end of 2019, first jitters could be measured around the Polders, too, with industrial output falling a hefty 2.1 per cent year-on-year in November (see chart). Meanwhile, Dutch consumers have become wary, too, threatening to withdraw the vital contribution balancing the malaise in manufacturing.

Hence, the further development of the Sino-American trade stand-off is of paramount importance for the Netherlands: If the tentative truce of the so-called phase 1 deal between Washington and Beijing grows into a comprehensive settlement eventually, the Dutch economy stands to profit more than many of its European peers. If, on the other hand, the trade war reemerges all guns blazing, the Netherlands will be among those hit particularly hard. And there’s another risk lurking: If Brexit will result in a no-deal scenario in terms of the future trade relationship between Britain and the EU indeed, or in the most superficial of trade deals for that matter, it’ll be the Dutch again bearing most of the burden.