Our comprehensive assessment of the Netherlands' operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect the Netherlands, as well as the latest industry developments that could impact the Netherlands' industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in the Netherlands before your competitors.
Netherlands Country Risk
Netherland's economic growth will be supported by the recovery in the domestic housing market. However, high levels of household indebtedness and the ongoing stagnation in the eurozone will prevent a stronger economic performance over the medium term.
The coalition government's ability to push through a front-loaded austerity programme and a raft of labour market reforms will contribute to the Netherlands' fiscal accounts being among the healthiest in the eurozone.
Major Forecast Changes
We have revised down our 2015 and 2016 headline real GDP growth forecasts to 1.4% and 1.6% from 1.5% and 1.8% previously.
Key Risks To Outlook
If ECB monetary easing fails...
Netherlands Industry Coverage (10)
BMI maintains a bearish outlook on autos sales in the Netherlands in 2014, forecasting a 2.7% drop in volumes over the full year. This comes on the back of expected weakness in the passenger car market, with only modest growth expected in the commercial vehicle (CV) and motorcycle markets. We maintain a bearish outlook on the country's growth prospects for 2014, and this is weighing on autos sales as consumers and businesses delay purchasing decisions. The rate of decline is likely to be moderated by low base effects from weak sales in 2013 and pent-up demand following several years of sustained decline in sales volumes.
Autos production in the Netherlands remains limited. Volumes are very low, and few companies maintain facilities in the country. Since 1999, vehicle production in the country declined almost every year up to 2011; we believe that the increase seen in 2013 and over our five year forecast period to 2018...
Food & Drink
Netherlands Food & Drink
BMI View: The Dutch economy will grow just above the eurozone average over 2015 and 2016. However, high levels of household debt combined with persistently weak external demand will prevent the economy reaching escape velocity. While we believe that the worst is over for the Dutch consumer, we do not envisage a significant spike in household spending any time soon. With household debt remaining extremely high this will cap disposable income and private consumption growth in the near and longer term. Consequently, we do not expect much dynamism in the country's food and drink market in the short term, with discounted goods remaining popular amid high unemployment and rising inflation.
Headline Industry Data (local currency)
2014 per capita food consumption growth: +2.69%; forecast compound annual growth rate (CAGR...
Netherlands Freight Transport
Moderate Recovery In Prospect For 2015
The different freight modes in the Netherlands will see moderately accelerating growth rates in 2015 relative to the steady, if uninspiring growth experienced in 2014. Airfreight and rail freight cargo will lead the way with volume growth around the 4% mark, while container throughput at the country's two main ports - Rotterdam and Amsterdam - will be expanding at a similar pace.
While positive about the Dutch economy's medium-term prospects, BMI notes that downside risks remain in 2015, given uncertainty over the strength of the eurozone recovery. We predict GDP growth of 1.5%, showing signs that a recovery is building after a mixed performance in 2014, when GDP is estimated to have gained only 0.4%. The improvement is coming from household expenditure, net...
BMI View: The Netherlands boasts a well-developed but extremely mature, saturated insurance market offering limited growth potential and minimal opportunities for new entrants. The country's economic downturn has further limited the growth of the sector with many companies turning to the government for financial support. As the economy starts to gain momentum the opportunities for local and multinational insurers should start to increase with the increasing privatisation of the healthcare sector offering particular scope for growth.
The Netherlands insurance sector is one of the most developed in the developed world with a mature market boasting a number of leading insurance services providers across the life and non life sub-sectors. Having reached a high level of maturity before the global economic downturn, the onset of the crisis has led to...
Netherlands Medical Devices
BMI Industry View : The Dutch medical device market is expected to expand at a subdued rate over the next five years with a US dollar CAGR of 3.2% forecast for the 2013-2018 period. Despite downward pressure on costs, health expenditure is forecast to grow steadily due to the needs of the rising elderly population and this will be a primary driver in the market, although low economic growth and the austerity programme proposed by the new coalition government are likely to hold down growth rates. The operating environment within the healthcare sector is set to become even more competitive as a result of the government's latest reform programme, although this should favour more innovative forms of technology that offer cost saving features, particularly given the Health Ministry's proposals to support...
BMI View: After back-to-back years of volatility in the Dutch metals sector, 2014 looks to have laid the foundation for a prolonged period of stability in terms of both production and consumption. This positive momentum in the sector is set to continue through to the end of our forecast period in 2018. BMI expects steel to continue to dominate the country's metals industry; however, we see no significant new investment in the sub-sector over the coming years. Tata Steel, the largest producer in the country, is facing up to an increasingly hostile and competitive operating environment, with cheap steel and aluminium being exported from China. Nevertheless, opportunities remain in high-quality steel, of which the Netherlands is a key producer.
Long-Term Growth In Output
After posting a contraction in both production and...
Although there are considerable downside risks over the short term, Dutch petrochemicals still offer some distinct competitive advantages over the medium-to-long term. Dutch petrochemicals production has several distinct advantages that should help it maintain its regional position: high level of integration, economies of scale and diversity of the product slate, according to BMI's latest Netherlands Petrochemicals report.
In 2014, the Netherlands had capacities of 3.98mn tonnes per annum (tpa) of ethylene, 675,000tpa of polyvinyl chloride, 95,000tpa of polystyrene, 1.9mn tpa of polyethylene, 780,000tpa of polypropylene and 450,000tpa of polyethylene terephthalate.
The rubber and plastic production index recovered strength in 2014 as manufacturing returned to growth with an average of 1.6% growth in 9M 2014, compared to -1.0% in 2013. Chemicals grew 2.1% while rubber and plastic rose 3.7% on...
Pharmaceuticals & Healthcare
Netherlands Pharmaceuticals & Healthcare
BMI View: Although the Dutch economy is expected to grow above the eurozone average over 2015 and 2016, the government will most likely continue to target the healthcare sector, resulting in further drug price cuts as it responds to rising healthcare costs from the demands of an increasing aging population. We uphold our view that the Netherlands' generic and patented drug manufactures will continue to face difficult challenges and that overall market growth will be marginal over the coming years.
Headline Expenditure Projections
Pharmaceuticals: EUR5.92bn (USD7.93bn) in 2014 to EUR5.85bn (USD7.31bn) in 2015; -1.2% in local currency terms and -7.9% in US dollar terms.
Healthcare: EUR71.31bn (USD95.56bn) in...
BMI View : Several recently announced high-profile investments have injected a renewed sense of optimism into the Netherlands renewables energy sector and as a result the project pipeline is expanding at a healthy rate, particularly in terms of wind power projects. Ongoing government subsidies and a long-term commitment to the expansion of Dutch renewables capacity are encouraging a range of potential investors and we expect to see solid gains in the market.
Previously, confidence in the renewables sector was undermined by the government lowering renewable energy targets. Initially, targets for renewable energy generation were set at an ambitious 20% of the country's total energy...
BMI View: Although the Dutch market is very mature and past the saturation point in 2011, this market is surprisingly dynamic, with two new mobile operators launching their services in H214/H115. The roll out of 4G LTE services provides some uplift to the mobile and broadband markets, but essentially operators are now cannibalising an existing audience. In this context, Tele2's delayed emergence as a converged services player lacks conviction. In the wireline sector, convergence has been a key theme over the last year.
Mobile subscriptions contracted by 2.9% to 18.310mn in Q314 as operators forbore from chasing organic growth and instead focused on migrating customers to higher value plans while also shedding inactive accounts. BMI now forecasts average...