Labour productivity in the Netherlands down again in 2024

The economy grows when more people are in paid employment and/or when labour productivity increases. Over the long term, improvements in labour productivity are the most important source of economic growth in advanced economies. However, labour productivity growth has been declining for some time in the Netherlands. Over the past decade, labour productivity grew by an average annual rate of 0.2 percent. In the preceding decade, the average increase was 0.8 percent per year.

Government expenditure contributes significantly to economic growth

In 2024, the public sector made a substantial contribution to GDP growth, just as it did in 2023. Government spending was 3.6 percent higher in 2024 than it was in 2023, adjusted for price changes. This was mainly due to higher spending by central government and municipalities and increases in healthcare costs, including higher labour costs. The increase in government expenditure stood at 2.9 percent in 2023.

In 2024, household consumption was 1.2 percent higher than it was in 2023. This increase was larger than in 2023, when consumption grew by 0.8 percent. Consumers had more money to spend in 2024, on average. Real household disposable income was 3 percent higher than it was in 2023. Collectively agreed wages rose by 6.6 percent in 2024, the sharpest increase seen in twelve years. Employment also rose again, and inflation was lower than in 2023.

Exports of goods and services increased in 2024, after a decline in 2023. This was mainly due to an increase in services exports. Exports of products produced in the Netherlands weakened, while imports increased but less rapidly than exports. As a result, external trade made a positive contribution to economic growth.
The decline in domestic goods exports was reflected in the performance of the manufacturing sector. In 2024, the value added by this sector was down by 0.8 percent relative to 2023. The sector shrank by 0.9 percent in 2023, after two consecutive years of growth. For more than half of the businesses in this sector, less value was added than in 2023.

Dutch economy is growing at the same rate as that of the European Union

Economic growth in the Netherlands last year was the same as economic growth in the EU as a whole, while in 2023, it was lower. Spain saw the highest GDP growth of the four largest economies in the EU, at 3.2 percent. France was in second place and Italy in third place. Europe's largest economy, Germany, contracted for the second consecutive year, while neighbouring Belgium saw its economy grow by 1.0 percent.

Looking at countries outside the EU, economic growth in the UK in 2024 was slightly lower than in the Netherlands. China's economy grew the fastest of the world’s three major economies, at 5.0 percent. The US saw its economy grow by 2.8 percent, which was higher than economic growth in the EU. However, in both countries growth was slightly lower than in 2023, unlike in the EU.