Netherlands
In-depth country-focused analysis on the Netherlands' economic, political and operational risk environment, complemented by detailed sector insight

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.

Country Risk

Netherlands Country Risk

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Core Views

  • Netherland's economic growth will be supported by the recovery in global trade, while the ongoing stagnation in the eurozone will prevent a stronger performance over the medium term.

  • With unemployment rising and the fiscal deficit widening, the government will continue to suffer in the polls.

Major Forecast Changes

  • We have revised down our 2014 real GDP growth forecast to 0.4% from 0.8% previously.

Key Risks To Outlook

  • Should the eurozone sovereign debt crisis take a turn for the worse in the coming quarters, we would expect a more pronounced contraction in GDP than currently expected.

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Macroeconomic Forecasts (Netherlands 2012-2015)

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Netherlands Industry Coverage (10)

Autos

Netherlands Autos

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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...

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Food & Drink

Netherlands Food & Drink

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BMI View:  The improvement in the recent headline GDP data for the Netherlands has been driven by household expenditure and net trade dynamics. Household consumption expanded by 0.2% q-o-q in the second quarter, having contracted by 0.7% in Q114. In terms of our core forecasts, we believe that the Dutch economy will expand by a modest 0.4% in 2014 given the sharp contraction during the first quarter of the year. 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) 2013 to 2018 = +3.75%.

  • 2014 alcoholic drink value...

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Freight Transport

Netherlands Freight Transport

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The Dutch economy rebounded in the second quarter of 2014, having posted a surprise contraction in the first three months of the year. Moreover, the economy has expanded at a time when Germany, France and the broader eurozone have slowed. While we still hold to a fairly constructive view for the Dutch economy over the medium term, we warn that the eurozone slowdown and precariously weak inflation across the euro area mean that the risks to our core forecasts are tilting to the downside.

Following a sharp contraction in real GDP during Q114, and given persistent sluggish demand across the euro area, the Dutch economy will post only modest growth in 2014. Moreover, with the European Central Bank (ECB)'s recent efforts to provide monetary stimulus still falling short of the shock and awe strategy that the eurozone needs to quash the threat of deflation, we warn that the Dutch economy is at increased risk of sliding back...

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Insurance

Netherlands Insurance

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BMI View : The negligible growth shown by the majority of Eurozone economies is reflected in our forecasts for the period covered by this report. We do not anticipate that either life or non life premium income in the Netherlands will move far from its current position during the medium term .   That notwithstanding, we believe opportunities will present themselves in certain sub sectors including healthcare and motor insurance.

There have been significant recent government reforms in relation to the provision of healthcare. As the government is determined to reduce centralised healthcare costs, more products are being offered by private insurers, often in conjunction with state providers. It is now mandatory for all Netherlands citizens to purchase health care insurance. From...

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Medical Devices

Netherlands Medical Devices

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Espicom 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 drive r 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...

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Metals

Netherlands Metals

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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...

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Petrochemicals

Netherlands Petrochemicals

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Although there are considerable downside risks over the short term, Dutch petrochemicals still offer some distinct competitive advantages in the medium-to-long term. The size and integration of the Dutch petrochemicals industry enables economies of scale, which means investors will sustain their interests in some segments where global market conditions are favourable.

In 2013, 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 stagnated in 9M13, although there was an overall upward trend in index growth from a low-point in March. The chemicals index saw a 5.5% decline over the period, reversing the growth witnessed in 2012. The contraction was much deeper than the performance of the manufacturing...

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Pharmaceuticals & Healthcare

Netherlands Pharmaceuticals & Healthcare

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BMI View: Despite the Dutch economy expanding during the second quarter of 2014 at a time were the broader Eurozone have slowed, we believe the Netherlands ' patented and generic drugmakers face difficult challenges over the coming years. The government will likely remain committed to reduce drug prices as it tries to cope with the healthcare demands of a growing aging population. This coupled with a patent cliff along with health insurers looking to include cheaper generic medicines into their policies, keeps our outlook for the market subdued.

  Headline Expenditure Projections

  • Pharmaceuticals: EUR6.09bn (USD8.04bn) in 2013 to EUR5.92bn (USD7.93bn) in 2014; -2.8% in local currency terms and -1.3% in US dollar terms.

  • ...

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Renewables

Netherlands Renewables

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BMI View :  O verall the future is looking positive for the renewable energy market in the Netherlands. While government downgrades of renewable energy targets undermined confidence in the sector in the short term, more substantial subsidies and long - term support for growth are encouraging potential investors and we are seeing a range of projects filling up the pipeline, particularly in terms of new wind capacity.  

As part of the EU, the Netherlands was obliged to set targets for renewable energy generation; these were initially set at 20% of the energy mix, which was then downgraded to 16% and yet further to 14% by 2020. The government has now agreed to a target of 16% renewable energy by 2023, suggesting reaffirmed commitment to long-term renewable energy aims.

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Telecommunications

Netherlands Telecommunications

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BMI View: New data shed fresh light on the Netherlands' wireline and mobile voice and data services markets. Internet telephony services lifted the wireline voice market in 2012/13 but the mobile market declined as operators shed more inactive prepaid subscribers than expected and mobile termination rate cuts accentuated declines in operator-billed voice and data service revenue. The roll out of 4G LTE services provides some uplift to the mobile and broadband markets, but essentially is cannibalising an existing audience. In this context, despite its considerable strength as an MVNO, Tele2 's delayed emergence as a converged services player lacks conviction.  

Key Data:

  • Mobile subscriptions contracted by 5.3% to 18.780mn in 2013 as operators forbore from chasing...

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