Johannes Schuffels

The Netherlands is no longer Germany's 17th federal state in economic terms.

New Commission research shows that once strong NL-DE correlations in macro variables (GDP, investment) have become insignificant.

A couple of observations on the stunning divergence between the frugal bulwarks.

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In conclusion, exports to DE remain very important to Dutch GDP but have not kept up with Dutch export growth in other markets.

You can find the full paper here: economy-finance.ec.europa.eu/document/dow...

Nonetheless, since growth in re-exports has been so strong, the total value added of Dutch exports to DE as a share of Dutch GDP has remained remarkably stable - it's just that the value added of exports to the rest of the world has grown much faster.

Export growth to from NL to DE has largely occurred because of re-exports (see both types below as a share of Dutch GDP), with significantly lower value added per euro of exports compared to exports of Dutch origin.

First of all, Germany is still the most important export market for Dutch goods and services. But things are changing. The share of exports going to Eastern European economies and China has increased strongly over the last three decades. Nonetheless, no other market comes close to DE.

While DE recovered faster from the 2009 recession than NL, roles have reversed over time: NL reached its pre-pandemic trend substantially faster than the EU as a whole, while DE is struggling to generate growth.

As Germany is sneezing, the Netherlands this time around, does not seem to be catching a cold. This observation has motivated our Economic Brief on evolving trade links between the Netherlands and Germany. A few charts from the brief in the thread below.

🇳🇱🇪🇺 The European Commission’s autumn forecast for the Netherlands is out. You can find more details on our forecast here: economy-finance.ec.europa.eu/economic-sur...