After seven years of no real growth, the Netherlands is poised to outperform the euro zone's lacklustre economy, with rebounding home prices driving a consumer spending revival. But even as anecdotal evidence of a Dutch recovery grows from last year's trickle into this year's flood,, a prolonged Chinese slowdown or a flaring of the Greek debt crisis could sap confidence again.
The Dutch independent economics forecasting office CPB now sees growth of 2 percent in 2015 and 2.4 percent in 2016 - potentially beating Germany as the strongest core euro zone country. The real economy shrank 0.2 percent between 2008 and 2015. "The housing market is gathering pace, exports are coming along well, investment is increasing and consumer confidence is rising," Prime Minister Mark Rutte told reporters on Friday.
Rutte hopes the upturn will lift his unpopular Cabinet's ratings as it begins 2016 budget negotiations and the Netherlands assumes the rotating European Union presidency in January. In August, official data showed the strongest growth in retail sales since the crisis and the largest increase in construction spending in a decade. After hitting the lowest reading on record in February 2013, consumer confidence swung back to well above a 20-year average in June.
"Domestic spending has been coming back since late last year," said Peter Hein van Mulligan, chief economist at CBS. "Before that, the economy had to rely on exports." TringTring, a bicycle delivery service for high-end groceries and meals that launched four months ago, is struggling to keep pace with demand. Sales at TringTring have been rising 25 percent per week since it launched on June 1, said founder Roel Mos, who has hired 65 couriers. "We are riding on that economic upswing," he said.
Broader economic indicators back up the recovery story. Household spending rose 2.2 percent in June, the CBS said, lifted by 5.7 percent higher durable goods sales, compared with a fall of 1 percent a year earlier. Online sales surged 28 percent in June and major retailers are jumping on the trend. Next month, non-food retailer Wehkamp will open the Netherlands' largest distribution centre for online orders, capable of handling 80,000 packages per day.
In March, Rutte declared an end to his Cabinet's austerity policies that had squeezed families' finances by raising taxes and cutting subsidies on healthcare and childcare. Home prices, which had tumbled more than 20 percent from their pre-crisis peak, have helped rebuild confidence, rising 5.8 percent since June 2013.
CHINA Uncertainties remain, especially over China. Slowing demand would hurt consumer companies, such as Philips, Unilever and Heineken, and Rotterdam port, Europe's largest. While less than 2 percent of Dutch trade is directly with China, a crisis there could hit trading partners such as Germany. Dutch household debt is still among the highest in the world. But it has been falling since 2012 as homeowners pay down mortgages.
Major banks ING Groep, ABN Amro
The government also aims to reduce heavy Dutch reliance on Russian fuel, as diplomatic relations deteriorate. . Unemployment has fallen to 6.8 percent in June from 7.3 a year earlier, still historically high for the Netherlands. But business is picking up at the biggest Dutch bike maker, Gazelle, which opened a 10 million euro ($11 million) factory in June to keep up with demand for "e-bikes" which use an electric motor to supplement pedal power. Marketing Director Ferdi Ertekin said Gazelle has struck a partnership with Italian designer Giugiaro, best known for its work on cars including the DeLorean of "Back to the Future", to make an e-bike for affluent, middle-aged men.
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