Economy
GDP (2006 est.): $688 billion.
GDP real growth rate (2006 est.): 3.0%.
GDP per capita (2006 est.): $42,200.
Natural resources: Natural gas, petroleum, fertile soil.
Agriculture (2.1% of GDP): Products--dairy, poultry, meat, flower bulbs, cut flowers, vegetables and fruits, sugar beets, potatoes, wheat, barley.
Industry (19% of GDP): Types--agro-industries, steel and aluminum, metal and engineering products, electric machinery and equipment, bulk chemicals, natural gas, petroleum products, transport equipment, microelectronics.
Services (79% of GDP): Types--trade, hotels, restaurants, transport, storage and communication, financial (banking and insurance) and business services, care and other.
Trade (2006 est.): Exports--$413.8 billion (f.o.b.): mineral fuels, chemicals, machinery and transport equipment, processed food and tobacco, agricultural products. Imports--$373.8 billion (f.o.b.): mineral fuels and crude petroleum, machinery, transportation equipment, consumer goods, foodstuffs. Major trading partners in 2005 (exports/imports)--EU (76.8%/55.0%), Germany (23.6%/19.0%), Belgium (11.9%/10.7%), China (0.9%/7.7%), U.K. (9.3%/6.3%), U.S. (4.9%/8.0%).

NETHERLANDS ECONOMY
After a strong performance in the 1990s, which brought unemployment to below 3%, the Dutch economy struggled through 2002 and 2003, plagued by relatively high costs and weak domestic demand. Real GDP growth recovered to 2.0% in 2004, but fell back slightly in 2005 to 1.5% largely due to lagging corporate investment and decreased government consumption. The economy is expected to grow by 3.0% in both 2006 and 2007. Export growth slowed to an estimated 6.8% in 2005, after a 2004 rebound of 9.8%, and is expected to stay strong through 2006 and 2007.

Private consumption decreased by 1.2% in 2006, primarily due to reforms in the health care system which shifted health care spending from private to public consumption. Employment gains brought unemployment down to 5.5%, leading to projections of a 2.3% increase in private consumption for 2007. After a drop in the early 2000s, investment staged a recovery in 2005. This upward trend in investment continued into 2006 with an estimated increase of 3%. A further increase of up to 9% is projected for 2007.

In recent years, many firms in the Netherlands cited a loss of competitiveness as a major impediment to growth as unit labor costs outpaced those of their major competitors, including within the euro area. Low wage rises in 2004 and 2005 enabled firms to regain some lost ground. With many collective wage agreements signed when strong growth was not yet apparent, the 2006 growth level has not yet put upward pressure on overall wages, but wages are expected to go up in 2007 as the collective agreements come up for renegotiation. Inflation dropped to 1.2% in 2004, but increased to 1.7% in 2005. For 2006, it is again expected to drop to 1%, with projections suggesting it will return to 1.25% in 2007.

The Netherlands was one of the first EU member states to qualify for the Economic and Monetary Union (EMU). Its fiscal policy has sought to strike a balance between further reductions in public spending and lower taxes and social security contributions. After an unexpected sharp economic downturn in 2003 caused the nominal deficit to breach the 3% GDP limit set by the EMU's Growth and Stability Pact, the center-right coalition government agreed to a package of spending cuts, which helped to lower the budget deficit to 1.8% of GDP in 2004 and further to 0.3% in 2005. The government achieved a 0.6% budget surplus in 2006 and a 0.2% surplus is expected for 2007.