What are the effects of the war in Ukraine on the Dutch economy?
On the 24th of February 2022, the Russians evaded Ukraine, a war crime for which the Russians will have to pay a high price. Many sanctions from NATO and other allies are trying to cut out the Russians from the economic climate (Rijksoverheid, 2022). According to the United Nations Humans Right office (2022), 2,665 people were killed, and 3,053 got injured. Among these casualties are also children. Safe to say that what is happening in Ukraine now is horrifying. But the war also affects other countries, and what exactly is the influence on the Dutch economy?
Economic growth
The war is influencing the Dutch economy and this comes from both the “boycott” of Russia and the lack of production in Ukraine. Because of insecurities and quickly following developments, it is difficult to determine what exactly will be the consequences in the long run. For now, however, the CPB expects the Dutch economy to grow nevertheless by 3.6% in 2022 and 1.7% in 2023 (Rijksoverheid, n.d.).
Russia
You might have noticed by the gas bill or filling up the tank of your car already, but because of the Russian evasion, oil and gas prices have increased rapidly. The Netherlands was pretty dependent on Russian supply as it covered about 20% of the total natural gas use. For the European Union, this was even 40%. The staggering gas prices are felt in every sector and calculated through the prices of these companies too. Therefore, it is expected that inflation will rise in 2022. In the following year, it is likely that this is already diminishing and should stabilise in the long run (Erken, et al., 2022). Moreover, it can be seen as an opportunity to switch to different energy sources, like solar panels. This could be a great chance to become more sustainable and independent from the unsustainable energy supply.
Ukraine
Furthermore, the Netherlands is not as dependent on Ukraine as Russia. Almost all the Dutch sunflower oil used to be imported from Ukraine, and this has stopped almost entirely. Nevertheless, the diminishing supply from the country is still felt and then mostly when it comes to vegetable oils. Sunflower oil is one of the cheaper oils present in many foods like baby food. There are quite some sunflower oil substitutes, but they are often not as healthy. And because manufacturers that use the sunflower oil need to use a substitute and other packaging, this could result in higher prices for the consumer, too (Olthuis, 2022).
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The situation is not good and will hopefully end soon. All over the world economical adjustments need to be made and as you can read, the Netherlands is no different. Are you thinking of having a business in the Netherlands or thinking of outsourcing your management? DMS could be your ideal business partner. DMS is a privately owned boutique corporate service provider. Their highly motivated and educated team of professionals is dedicated to forge longstanding relationships with their clients. The experienced team have values and standards of a high-level international commerce and have been providing top-tier management services for over 20 years. Services include Domiciliation+, Management, Administration and, if necessary, Liquidation.