The economy can grow by increasing the amount of work and/or by increasing productivity per hour worked. In developed economies, long-term productivity growth is the main source of economic growth. However, productivity growth has been declining for some time. Over the past decade, productivity in the Netherlands grew by an average of 0.2% per year, compared to 0.8% in the previous decade.

Government consumption contributed most to GDP growth in 2024, as in 2023. Government consumption was 3.6% higher than in 2023, corrected for price changes, due to higher spending by the government and municipalities and an increase in healthcare costs, partly due to higher personnel costs. Household consumption increased by 1.2% compared to 2023, with households having more disposable income. The real disposable income of households was 3% higher than in 2023, and wages rose by 6.6%, the highest increase in over forty years.

Exports of goods and services grew again in 2024, after a decline in 2023, mainly due to higher service exports. However, exports of domestically produced goods declined. Imports also grew, but less than exports, resulting in a positive contribution to economic growth from foreign trade.

The manufacturing industrys added value was 0.8% lower than in 2023. In 2023, this sector contracted by 0.9%, following two years of growth. In more than half of the manufacturing subsectors, added value was lower than in 2023.

Government Spending Contributes Most to Economic Growth

The government contributed most to GDP growth in 2024, similar to 2023. Government consumption was 3.6% higher than in 2023, adjusted for price changes, primarily due to higher national and municipal spending and increased healthcare costs, including higher personnel costs. In 2023, government consumption grew by 2.9%.

Households consumed 1.2% more in 2024 than in 2023, a greater increase than in 2023 when consumption grew by 0.8%. Consumers had more disposable income in 2024, with real disposable income 3% higher than in 2023. Collective labor agreements wages rose by 6.6% in 2024, the largest increase in over forty years. Employment also grew, and inflation was lower than in 2023.

The export of goods and services grew again in 2024, after a decline in 2023, mainly due to increased service exports. However, the export of domestically produced goods shrank. Imports also grew, but less than exports, resulting in a positive contribution to economic growth from foreign trade.

The decline in exports of domestically produced goods is reflected in the manufacturing sector. In 2024, the added value of the manufacturing industry was 0.8% lower than in 2023. In 2023, this sector contracted by 0.9%, following two consecutive years of growth. In more than half of the manufacturing subsectors, added value was lower than in 2023.

Dutch Economy Grows as Fast as the EU

The growth of the Dutch economy in 2024 was 1.0%, equal to the growth in the European Union (EU). In 2023, the Dutch economy underperformed compared to the EU. Spains GDP grew by 3.2% in 2024, the fastest among the four largest EU economies, followed by France and Italy. Germanys economy, the largest in Europe, contracted for the second consecutive year. In neighboring Belgium, growth was also 1.0%. Economic growth in the UK was slightly lower than in the Netherlands in 2024.

Among the three major economic blocs, China grew by 5.0%, the fastest. The US also had higher growth than the EU, at 2.8%. Growth in both countries was slightly lower than in 2023, unlike in the EU.