OECD Economic Surveys : Netherlands 1967.

71 Pages·3.92 MB·English

by  OECD

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BASIC STATISTICS OF THE NETHERLANDS
THE LAND
Area11,000sq.kml(cid:9) 33.4 Major cities I Jan. 1966 thousands of
Agricultural area 1 Jan. 1966 (1,000 sq. inhabitants:
km.)(cid:9) 25.7 Amsterdam (cid:9) 862
Woodland I Jan. 1966(1.000sq. km.).. 2.9 Rotterdam(cid:9) 728
The Hague (cid:9) 593
Utrecht(cid:9) 271
THE PEOPLE
Population 31 Dec. 1965 (thousands). 12,377 Netraleofincreaseperthousandinhabi¬
No. ofinhabitants per sq. km(cid:9) 370 tants 1960-1965(cid:9) 13.0
Netnaturalincreaseaverage1960-1965 Net immigration average 1960-1965
(thousands)(cid:9) 154 (thousands)(cid:9) 8,6
PRODUCTION
Gross national product (millions of Gross national product at factor costs
guilders) 1966(cid:9) 75,880 by origin in 1965:
GNP per head (USA*)(cid:9) 1,675 Agriculture(cid:9) 8%
Gross fixed investment (average 1964- Industry (incl. construction)(cid:9) 41 %
66): Other(cid:9) 51 %
PercentageofGNP(cid:9) 25
Per head (USA$)(cid:9) 380
THE GOVERNMENT
Currentgovernmentexpenditureongoods Composition of the Second Chamber
and services (°/_ ofGNP 1965)(cid:9) 16 (seats):(cid:9)
Currentgovernmentrevenues(%ofGNP Catholicpeople's party(cid:9) 42
1965) (cid:9) 37 Labourparty(cid:9) 37
Central government debt (% of central Liberal party(cid:9) 17
government current revenues 1965)... 153 Anti-revolutionary party (cid:9) 15
Christian-historian party (cid:9) 12
Democrats 66(cid:9) 7
Other (cid:9) 20
Last elections: 1967
Next elections: 1971
LIVING STANDARDS
Average hourly earnings of workers in Number oftelephones per 1,000 inhabi¬
industry October 1966 (cents) (cid:9) 381 tants (31 Dec. 1965) (cid:9) 188
Number ofprivate cars per 1,000 inha¬ Number of radio sets per 1,000 inha¬
bitants (1-8-1966)(cid:9) 121 bitants (31 Dec. 1965) (cid:9) 217
NumberofTVsetsper 1,000inhabitants
(31 Dec. 1965)(cid:9) 171
FOREIGN TRADE
Exports: Imports of goods and services including
Exports of goods and services including incomepaymentstotherestoftheworld
income payments from the rest of the (average 1964-1966 as % ofGNP).... 53
world (average 1964-1966 as percentage Main imports in 1966 (percentage of
ofGNP) (cid:9) 53 total imports):
Main exports in 1966 (percentage of Machineryandtransportequipment 25
total exports): Food, drink, tobacco(cid:9) 13
Machineryandtransportequipment 22 Textiles andclothing(cid:9) II
Agricultural products(cid:9) 17 Mineral fuels (cid:9) 10
Textiles and clothing (cid:9) 10 Chemical products(cid:9) 7
Chemical products (cid:9) 11
Mineral fuels (cid:9) 7
THE CURRENCY
Monetary Unit: Guilder Current Unit per USA ».. 3.62
ECONOMIC SURVEYS BY THE OECD
NETHERLANDS
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
The Organisationfor Economic Co-operation andDevel¬
opment was set up under a Convention signed in Paris on
14th December 1960 by the Member countries ofthe Organ¬
isationfor European Economic Co-operation and by Canada
and the United States. This Convention provides that the
OECD shall promote policies designed:
to achieve the highest sustainable economic growth
and employment and a rising standard of living in
Member countries, while maintainingfinancial stabi¬
lity, and thus to contribute to the development ofthe
world economy;
to contribute tosoundeconomic expansion in Member
as well as non-member countries in the process of
economic development;
to contribute to the expansion of world trade on a
multilateral, non-discriminatory basis in accordance
with international obligations.
The legalpersonality possessed by the Organisationfor
European Economic Co-operation continues in the OECD,
which came into being on 30th September 196J.
The members ofOECD are: Austria, Belgium, Canada,
Denmark, France, the Federal Republic ofGermany, Greece,
Iceland, Ireland, Italy, Japan, Luxembourg, the Netherlands,
Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the
United Kingdom and the United States.
This document was approved
by the Economic and Development Review Committee
in April 1967.
CONTENTS
Introduction (cid:9)
I Recent trends (cid:9) 5
Supply (cid:9) 5
Demand (cid:9) 8
External and internal equilibrium of the economy 12
External account (cid:9) 13
Internal financial equilibrium (cid:9) 15
Prices andwages (cid:9) 15
Income distribution and wealthformation.. 15
Balance ofpayments (cid:9) 21
Export determination in the longer run.. 25
II Recent policies (cid:9) 30
Public finance (cid:9) 30
1967 Budget (cid:9) 34
Monetary policy (cid:9) 36
Incomes policy (cid:9) 39
HI Prospectsfor 1967 (cid:9) 40
IV Summary and conclusions (cid:9) 43
Appendix. Methodological and Statistical Material on Export De¬
termination (cid:9) 47
Statistical Annex 55
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ECONOMIC SURVEYSNETHERLANDS
INTRODUCTION
The last business cycle reached its upper-turning point in the course
of 1966. The expansion ofoutput slowed down and labour market condi¬
tions eased appreciably for the first time since 1958. Prices were virtually
stable since the first quarter but the current balance ofpayments remained
in a deficit position and labour cost pressure persists. Money and capital
market conditions were tightened further in 1966 and government control
onprices and wages was re-inforced in June 1966. Budgetarypoliciescon¬
tinued to exert a strong expansionary influence on the economy in 1966 but
measures have been taken to reverse this in 1967.
The former coalition Government suffered a parliamentary defeat in
October 1966 over its budget proposals and taxation plans. The budget
implied a shift towards more restrictive policies but it was based on opti¬
mistic assumptions as regards the development ofthe external account and
wages in 1967. The interim cabinet strengthened the efforts towards
disinflationary budget policies. The Economic Plan for 1967 foresees a
sharp swing in the current balance of payments, mainly as a result of the
weaker trend ofdomestic demand and higher unemployment.
Part I ofthis Survey deals with supply and demand developments and
the balance of payments in 1966, with special reference to recent changes
in the economic environment and the competitive position of the Dutch
economy. Part II is devoted to monetary, budgetary and income policies
and their contribution to the stabilization programme. Prospects for 1967
and policy conclusions are discussed in Parts III and IV.
I. RECENT TRENDS
Supply
The rate of growth ofbusiness capacity in 1966 has been estimated at
5.5 to 6 per cent. The ratio of private productive investment to GNP
(19 per cent) and the increase in total labour supply (1 to 1.5 per cent)
remained virtually unchanged over the past three years. The actual rate
ofgrowth ofoutputin 1966fell about 1 per cent belowthepotentialrate of
growth. Production was adversely affected by the weakening trend of
foreign demand in the main Dutch export markets, Germany and the
United Kingdom. But as theyear went on, domestic demand, notably for
home production, began alsotoslacken. Lessoptimisticbusinessandearn¬
ing prospects combined with a tight monetary situation diminished labour
hoarding and led to some hesitation in consumer spending and the imple¬
mentation ofequipment and building plans. Spare capacity, together with
labour redundancy and lay-offs (up to the middle of last year virtually
restricted to structurally weak branches such as coal and textiles) has since
become more frequent.
Table 1. PRODUCTION AND EMPLOYMENT OF ENTERPRISES
PERCENTAGE VOLUME CHANGEFRC)M PREV1OUS YEAR
PRODUCTION EMPLOYMENT1
1963 1964 1965 1966 1963 1964 1965 1966
Agriculture (cid:9) 2.5 11.5 1 1.5 2.5 2.5 4.5 2.5
Industry (cid:9) 5 7.5 7 6.5 1 1 1 0.5
Building (cid:9) 4 17 6 7.5 6 5 3 2.5
Services (cid:9) 4.5 6.5 6 3.5 2 2.5 2.5 2
4 8 6 5 1.5 1.5 1.5 1
1. Average number ofemployed persons, including self-employed,
Source: Centraal Economisch Plan, 1964-1967.
The increase in industrial production in 1966 was of about the same
order of magnitude as in 1965 (some 7 per cent), but there was a distinct
flattening ofthe trend during the year and the growth performance within
industry was less even as between branches than previously. The stagna¬
tion ofoutput ofthefood andtobaccoindustryand somedurableconsumer
goods can partly be attributed to advance purchases in the last quarter of
1965 in anticipation of higher indirect taxes in 1966. The textile, leather
and clothing industry, as well as coal mining, are still in the middle of a
structural contraction process, speeded up by growing foreign competition.
As in previous years, chemicals made the most impressive progress, closely
followed by the fuel and natural gas industry.
Apart from services, the contribution of other non-industrial sectors
to overall growth was somewhat bigger in 1966 than a year earlier. The
expansion ofbuilding activity outstripped the industrial growth with a shift
from residential construction to business building. Agriculture lost less
Diagram 1. INDUSTRIAL PRODUCTION BY SECTORS
Seasonally adjusted, monthly averages, 1960 = 100
I960= IPO-
____^^^_ Manufxturini,total
(cid:9)___ Chemicals
200
(cid:9) Engineeringandmetalproducts '
/
Food,beveragesandtobacco f
(cid:9) Textilesandclothinf '
150
100 .
Source: Industrial Production, OECD.
labour and wasable to expand slightly faster thanin 1965 although produc¬
tion was affected by the outbreak offoot-and-mouth disease in the spring
of 1966 and weather conditions were as bad as a year earlier. The rather
disappointingperformanceoftheservicesectorcanbeascribedtotheweaker
trend ofworld trade and tourism, notably emanating from Germany.
As a result of slackening demand pressure, labour market conditions
eased appreciably in 1966. On a seasonally adjusted basis unemployment
went up from 39,000 in June to some 60,000 in December (1.3 per cent of
total labour force), while the number of vacancies dropped from 122,000
to 90,000 over the same period. The easing of pressure was most pro¬
nounced in certain northern, eastern and southern border regions, and the
building, metal and textile industry.
Diagram 2. LABOUR PRODUCTIVITY
AND INVESTMENT IN MACHINERY AND EQUIPMENT
Ft.million 10U liter
(1958prie.) (tmmUlog.teoh) 1930-IW
5000
in
ISO
4000
140
Grossinvestmentinmachineryandequipment
otherthantransportequipment ,
130
3000
1»
110
2000 (cid:9)
100
J90
1955 1956 1957 1951 1959 19(0 1961 1962 1963 1964 1965 19662
1. Averagedailyproductionperemployed(adjustedfor 1961 reductioninworking
hours).
2. Preliminary.
Source: Maandschrift, Central Bureau ofStatistics; National Accounts 1955-1965,
Statistical Office of the European Communities.
Demand
Total nominal demand increased at about the same rate in 1966 as in
1965 (some 10 per cent); but with a sharper year-to-year increase in prices
the real rate of growth declined from 6.1 per cent in 1965 to 5.5 per cent.
In contrast to 1965 the expansion was led by a new, though temporary,
investment push and a normalisation of stock building activity, while the
formersteepriseinprivateconsumptionandexportsdidnotcontinue. The
change in the pattern of demand, and especially the increase in stock
formation, involved on' balance a shift towards more import-elastic
components of expenditure.