The economy is growing, but major challenges lie ahead

Economic policy analysis of the metropolitan region

Since 2011, Vrije Universiteit Amsterdam (VU) and TNO Vector have been working together – in varying research consortia – on the annual Economic Outlook for the Metropolitan Region of Amsterdam (Economic Outlook MRA).

Since 2020, SEO Amsterdam Economics (SEO) has co-authored the economic outlooks. “What the CPB Netherlands Bureau for Economic Policy Analysis does for the Netherlands, we do for the Metropolitan Region of Amsterdam,” says Thijmen van Bree, economic researcher and consultant at TNO Vector.

He has been involved in the reports since 2011. “We set out the facts on how the region is doing in socio-economic terms. This gives everyone concerned with the development of the region a guide for making wise choices.”

The right balance

Those choices are not easy ones. Naturally, we want a thriving business community, but what if that comes at the expense of air quality, health, and climate goals? The challenge lies in finding the balance between the economy on the one hand and sustainability and social development on the other.

Overall well-being

Leaving aside the regular sections that are covered in every edition, the main difference in relation to last year’s report (2023) is its perspective. Last year, the theme of ‘overall well-being’ was the common thread running through the report. This year, this topic was expanded to feature the themes of scarcity and shortages more prominently in the narrative.

Short-term pain

We describe the overall well-being of the Metropolitan Region of Amsterdam based on 3 main dimensions: economy, society, and sustainability. The interaction between these 3 dimensions always throws up problems in a particular area. For example, greater commitment to sustainability may come at the expense of a traditional type of business activity.

However, a trade-off in favour of sustainability will generate new business in the long run. “It’s a matter of making choices, but it never comes without short-term pain,” says Van Bree.

Growth after the pandemic

By and large, the Metropolitan Region of Amsterdam is in good shape. The Economic Outlook MRA provides clear evidence of this. Earning power and employment in the MRA have developed favourably in recent decades compared to the Netherlands as a whole, the EU27, and other European metropolitan areas. Especially after the coronavirus restrictions were lifted in 2021 and 2022, the MRA experienced strong economic growth.

Although growth is now slowing down, the outlook for 2024 and 2025 is still positive. It is also notable that energy consumption has fallen in most sectors, despite economic growth. There has been a decoupling of economic growth and higher energy use, particularly as sectors have become more energy-efficient.

Urgent challenges

However, there are also challenges. For example, the labour market is expected to remain tight in 2024 and finding affordable housing is difficult. The goal of becoming climate-neutral by 2050 is another major challenge yet to be met.

“Although the overall economy is growing, major challenges remain,” Van Bree stresses. “That is also our appeal to the users of the report: there are steps to be taken and it would be imprudent to delay. There’s a very urgent need to get to grips with the issues.”

Enriching CBS data

A lot of data were used to prepare the economic outlook, especially from Statistics Netherlands (CBS). TNO Vector plays an important role in analysing, enriching, and combining these data. “We carry on where CBS stops,” says Van Bree. “CBS doesn’t show any economic figures by sub-region of the MRA. For that reason, we combine and enrich CBS data with other sources to provide key economic figures for each sub-region of the Metropolitan Region of Amsterdam. Thanks to our consistent time series, SEO and VU are able to perform analyses as well.

The report is written jointly, based on the analysis results from TNO Vector, VU, and SEO.”

Van Bree: “The strength of the Economic Outlook MRA lies mainly in the fact that we’ve been doing this since 2011. This gives us the overall view that you need to spot a particular trend over the years. Have there been any improvements? Or is the opposite true and have tensions arisen? It’s also of value that we’ve been doing this together with VU and SEO for so long.”

It’s published – what comes next?

Now that the new report, Economic Outlook for the Metropolitan Region of Amsterdam 2024, has come out, we hope that as many government administrators, civil-society organisations, and businesses as possible will read it and base their choices on its results and findings.