After the economic boom in 1997 when GDP grew by 3.3%, the term "Dutch miracle" became widely used in reference to the Dutch economy. The nation's successful polder (literally "dyke") model - based on an agreement between employers, unions and the government to strive for wage moderation in exchange for shorter working hours - set an example for other countries eager to mimic the buoyant economic growth of the Netherlands. Robust performance in 1997 was continued into the first quarter of 1998 with a quarter-on-quarter growth rate of 1.1%, slowing slightly to 0.8% in the second quarter. However, while economic growth in the Netherlands continues to exceed the European average by one percentage point, preliminary GDP data published by Statistics Netherlands shows a sharp slowdown in economic growth in the third quarter of this year when real GDP expanded by a mere 0.1%. Consequently, analysts have revised GDP growth forecasts: Morgan Stanley Dean Witter adjusted 1998 and 1999 estimates of real GDP year-on-year growth to 3.6% and 2.2% respectively from the original 3.9% and 2.5%. So what has happened?
A hit to foreign trade
The Dutch economy is an open, export-oriented economy with more than half its produce destined for foreign markets.