Assessment and Recommendations

After having stagnated during the past five years, the Dutch economy finally appears to have begun to recover. Substantial progress has been made towards correcting the financial imbalances that contributed to the downturn. Furthermore, major labour market, social benefit and health care reforms are underway to enhance labour utilisation and labour productivity. At the same time, cost competitiveness is being gradually restored. Barring further international energy price spikes, the Dutch economy should grow above trend in 2006, turning the page on one of the worst periods of stagnation since the 1930s. Even so, the economy remains vulnerable in the face of adverse shocks.