On the Index of Economic Freedom 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 member of the European Union, the OECD and the World Trade Organisation
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 mechanized 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.
The stern financial policies of the Balkenende cabinets, which are often identified with finance minister Gerrit Zalm, have led to a deficit of only 0.3% of GDP in 2005, coming from 2.1% in 2004. The deficit is expected to show a small rise to 0.5% in 2006, and slight surplus in 2007. In 2006 public debt stood at 51% of GDP and is expected to fall below 50% in 2007 for the first time in 25 years, down from over 80% in the early nineties.
The Netherlands, which derives more than two-thirds of GDP from merchandise trade, had strongly positive balance of payments for 2005 estimated at €31.5 billion. Leading export markets (2005) are Germany with 25.1%, Belgium with 12.2% and the United Kingdom and France with both 9.4%. Leading suppliers (2004) are Germany (17%), Belgium (9.4%), China (8.8%) and the United States (7.8%). As becomes clear from these figures, Germany is by far the most important trading partner of The Netherlands.
Leading foreign investors in the Netherlands (2005) are the United States with 18.5%, the United Kingdom (14.1%), Germany (12.0%) and Belgium (10.1%).
While its oil reserves in the North Sea are of little importance, the Netherlands is presently the second-greatest natural gas producer in the European Union and the ninth-greatest in the world, accounting for more than 30% of EU total annual gas production and about 2.7% of the annual world total. Proven natural gas reserves of the Netherlands are estimated (as of January 2005) at about 50-60 trillion cubic feet, or about 0.9% of the world total. Although the Netherlands owns substantial gas reserves in the North Sea, most of its production is presently from on-shore wells, and much of the natural gas produced by the Netherlands comes from Groningen Province, which borders the North Sea. Consumption of natural gas in the Netherlands is only about two-thirds of its production; the rest is exported and the Netherlands is presently the world's fifth-greatest natural gas exporter. Partly as a result of this large reserve of natural gas, nuclear power accounts for only 3.8% of the country’s electricity production.