Essay Economy of Rotterdam gets back on track Although geopolitical risks threaten the recovery, the growth expectations for Rotterdam remain positive. With a relatively young, bettereducated and also more enterprising workforce, the city seems to be emerging stronger from the crisis. Of course, nobody can predict the future, but we can tentatively conclude that the recession resulting from the financial crisis is over. After two years of shrinking, the Dutch economy grew by.9% in 214. Thanks to an increase in consumer and producer confidence, economic growth will subsequently strengthen to 1.2% in and 1.5% in 216. This is evident from the latest estimates by De Nederlandsche Bank (DNB). The economy of the Rotterdam region grew by 1.4% in 214. However, the outlook for the world economy remains unsure, partly due to the explosive geopolitical situation in parts of the world. This is dangerous for the open Dutch economy, which is known to have a strong dependency on international commerce. This is even truer for Rotterdam and the entire Rhine delta region. Figures such as the gross regional product and the added value in this area show greater fluctuations from year to year than the Netherlands as a whole. This is true in both a positive (growth) and negative (shrink) sense. Negative scenario The growth expectations for the global economy differ between economists and are continually being adjusted. In its December estimate, the CPB Netherlands Bureau for Economic Policy Analysis listed a modest growth acceleration of the global economy from 3.25% in 214 to 3.75% this year. Recovery remains weak in the Euro zone with an expected growth of.75% in 214 and 1.25% in. A growth figure of 3% is expected for global trade in 214, and 5% for this year. This is, however, lower than previous expectations for. Growth in Germany appears to be disappointing, which will put downward pressure on an already fragile growth in the Netherlands and therefore also Rotterdam. In addition to the struggle in Iraq and Syria, the conflict between Russia and Ukraine is primarily a potential danger to the further recovery of the Dutch economy. DNB has calculated two scenarios: a mild variant and a severe variant. In both cases, there is a threat of lower global growth and rising energy prices. These effects are more pronounced in the severe variant, with a decrease in producer confidence and thereby also business investment. Figure 3 shows the effect on the key figures of the Dutch economy. The effects are most noticeable in, with a tentative recovery in 216. In all cases the effects are negative. Rotterdam out of a dip Close to home, the Westland is already feeling the negative consequences of the boycott on fruit and vegetables by Russia. Employers organisation LTO Glaskracht anticipates a decline of 5 to 1% in exports, and therefore falling prices. The suspension of European aid systems in September means that the sector itself is now paying the price. Because the Westland region makes extensive use of the logistics cluster in the Rhine delta, this boycott is having a detrimental effect on the area economy.
Figure 1: Economic growth (GDP, volume mutations) % - 213 Source: CBS the Netherlands Rijnmond (CP) Figure 2: Results Russia Ukraine scenario: black version Mutations in percentage, unless mentioned differently. Source: DNB 214 difference difference 216 difference 4 with estimation with estimation with estimation 2 GDP -,4 (-,6) 1,1 (-,5) 1,7 (,1) Consumption -1,4 (-,4),1 (-1,) 1,4 (-,6) -2-4 -6 Corporate investments 2,7 (-2,) 1,5 (-3,1) 5,7 (1,7) Export goods and services 1,2 (-1,7) 2,9 (-1,5) 5,4 (,6) Import goods and services 1,5 (-1,7) 2,3 (-2,1) 5,8 (,3) Consumer price index,9 (,4) 1, (,3),7 (-,3) 29 21 211** 212* 213* Unemployment (% working population) 7,2 (,1) 7,2 (,1) 7,2 (,6) UMU amount (% GDP) -2,8 (-,1) -2,4 (-,2) -2,5 (-,7) Figure 3: Development GDP Source: CPB macro economic outlook Germany France Netherlands UK USA 1, 8, 6, 4, 2,, -2, -4, -6, 2 21 22 23 24 25 26 27 29 21 211 212 213 214 However in October 214, ING predicted that the balance for the economy of Rotterdam would ultimately be positive. The city is growing by 1.3% in according to expectations, consistent with the Dutch economy. But the bank warns that the signal is not yet green on all fronts. Although Rotterdam is profiting from the global recovery, the image is mixed. The industry shows a mixed picture in which the decline in Germany constitutes a risk. The high energy prices also play their part in Rotterdam, particularly petrochemicals. But other sectors show growth. This growth is also a result of the renewed rise in private consumption and the increased number of tourists, and is also thanks to extensive, positive international promotion of Rotterdam in recognised media such as the Rough Guide and Lonely Planet. After two years of shrinking, the Dutch economy is growing again.
Essay Economy of Rotterdam gets back on track Young and better qualified Although the crisis hit hard in Rotterdam, the city has emerged stronger from the recession on several fronts. For the economic growth potential it is important that the population continues to increase and that the quality of the working population improves. As such, the number of inhabitants in Rotterdam will increase from 618, to 623, in 216. The number of households will increase from 31, to 311,, whereby the population grows slightly faster than the number of households. In absolute terms, all age categories grow. In terms of proportion, the group under 2 years of age shows an increase from 22% to 22.1%, the group aged 65+ from 15% to 15.4%. The potential working population grows by 4, people, but the proportion of the total population decreases from 63% to 62.4%. The image is indeed that Rotterdam has an ageing population, but less so than the national average. So the city remains relatively young. One of the most important characteristics that can distinguish a region is the quality of its working population. When the recession began in, Rotterdam had a significantly less well-educated workforce than the Netherlands. But in recent years, Rotterdam has caught up with this practical backlog (see figure 6). Rotterdam now has a slightly higher proportion of highly educated men than the Netherlands (33.8% versus 33.3%), but the proportion of middle is slightly lower and the proportion of lower educated is slightly higher. For women, the picture across the board is very similar to the Netherlands. If Rotterdam is able to sustain the trend of recent years, it will mean a structural reinforcement of the economic power of the city. Labour market recovery Unemployment continued to rise from to early 214, from 6.9% to 16.%. In the second quarter of 214, however, it fell to 14.8%. As such, unemployment in Rotterdam is significantly higher than in Amsterdam (9.5%) and The Hague (11.3%). Yet the fall in unemployment in the second quarter is stronger than in Amsterdam (+.5%) and The Hague (-.5%). The development of job vacancies confirms this short-term recovery. The most recent figures (up to and including September 214) from the temporary employment sector show a growth for the Rhine delta region in all segments. Figure 5: Demographic situation Development working population Rijnmond 213 Source: CBS 56-65 Men Women 56-65 Figure 6: Working population in reference to level of education Netherlands and Rotterdam 213 (%) Source: CBS Low Average High Unknown Total Netherlands 23,7 2, 43,1 42,9 32,2 34,9 1, 2,2 Rotterdam 28,5 19,2 37,4 39,5 32,7 37,8 1,4 3,4 46-55 46-55 Women Netherlands 21,5 17,9 44,5 43,2 33,1 35,8,9 2,1 Rotterdam 25,1 18, 43,9 43, 3,4 36,4,6 2,5 36-45 26-35 36-45 26-35 Men Netherlands 25,4 21,7 43, 42,7 31,5 33,3 1,1 2,3 Rotterdam 29,7 22, 38,6 4,6 3,5 33,8 1,2 3,6 15-25 15-25 15% 1% 5% 5% 1% 15%
Most striking is industry with a significantly stronger growth than the rest of the Netherlands. The Rhine delta region has also shown structurally better results than the Netherlands in the field of administrative personnel. However, the region still lags behind with technical positions (such as electrical and mechanical engineering), while progress is erratic for medical positions. For, the UWV predicts a further increase of 12.5% in the number of job vacancies to 56,4. UWV predicts a rise in vacancies in medical functions. When we look at the economic structure, we see that 4% more companies became established in Rotterdam in 214 than in (see figure 8). Growth can primarily be seen in business and other service industries, education and care. On the other hand, the number of branch locations in the so-called hard sectors (production, transport etc.) has decreased. The amount of jobs has fallen by almost 4% since the crisis began. In general, the impression is that the number of branch locations in the hard sectors has fallen more than the number of people employed. For services, the situation is the reverse. So we see a concentration in the secondary sector, which indicates a survival of the fittest, and the opposite in the tertiary sector. Of course, the latter is heavily influenced by the emergence of more freelancers, partly a result of the recession. But it is also a sign of increased entrepreneurship. And this reinforces the strength of the Rotterdam economy. The amount of jobs may have fallen, but large companies in Rotterdam are generally performing well. A good indicator of this is the share price. The majority of several listed enterprises with a head office or an important branch office in Rotterdam (such as Unilever, Shell and Hunter Douglas) show a clear share price increase in the period -214. Companies with a disappointing share price performance are linked to construction and real estate. Figure 7: Vacancies Source: UWV Figure 8: Change in economic structure Change in percentage 214 wanted: For the UWV predicts a further rise to 56,4 vacancies. A rise of 12,5% m/w Establishments Working population Industrial energy, water culture and agriculture -,5 ~ Construction -1,1 -,6 Wholesale business (not in cars, etc) -1,5 +,5 Retail business (in cars etc) -2, +,5 Transportation and postal services -,7 -,7 Hotel and catering industry -,2 +,4 Information sector -,2 -,2 Financial institutions -,1 -,6 Corporate services +1,8-1,2 Government ~ +,1 Education +,6 +,5 Care +2,4 +1, Other services +1,4 -,2 Source: Company index Zuid-Holland 214
Essay Economy of Rotterdam gets back on track Infrastructure Traffic congestion in Rotterdam has increased in recent years by 5%, while at a national level it has reduced by 8%. According to the ANWB, this is because few new roads have been built. In 213 Rotterdam was listed five times in the Traffic Jam top 1, compared to once in. Most traffic jams occur on the A2, A15, A13 and A16. More investments are planned in the coming years, predominantly along the A13-A2-A16 route. The effects of this should be visible after 216. Partly owing to the completion of the Second Maasvlakte, an increasing demand for logistics areas must be taken into account. The market for industrial premises does not form an obstacle for future growth. Rotterdam and the region had a more than sufficient supply of business premises in 214, both areas and offices. Because the supply is increasing faster than the demand, the supply can be described as ample when compared to other large cities. On a national level, we see that nowadays the transport sector accounts for the greatest demand for business premises, followed by the construction and industrial sectors, a position that was traditionally held by the service sector. Our expectation is that this is also, perhaps especially, visible in Rotterdam. With the emergence of e-commerce, the logistics landscape is slowly moving towards several large nodes for storage and transport, and from there many more smaller transport systems (urban distribution) to the consumer. If we look at the office space market, the national trend of a falling demand for office space is also clearly visible in Rotterdam. The supply continues to increase and the demand consists primarily of the need to replace existing locations. The lower the office space market ratio, the greater the offices space market. Vacancy levels will be further tackled over the coming years by the Rotterdam transformation team. The prices of single-family homes in Rotterdam have fallen drastically by 2% when compared to. For multifamily houses, the price reduction has been limited to 4%. This is striking when compared to the other three large cities. The figures from 214 (NVM) show that the price decrease is continuing, with the exception of apartments. The number of transactions, however, is increasing, while the average selling time is decreasing. Interesting trends As well as e-commerce, 3D printing is also a trend that can bring about great changes for Rotterdam. For now, 3D printing remains a small-scale matter: it is still expensive, energy-intensive, only suitable for smaller products and useful for a relatively limited number of raw materials. But in the long-term, for example, the importance of localised production could increase and that of container transport could decrease. Another relevant development is foreign tourists increasing interest in Rotterdam. Positive stories in the media surrounding the opening of the Markthal, but also the renewed Central Station and De Rotterdam have contributed to this. In 214, the number of overnight stays in hotels increased by more than 18% and the number of incoming passengers at Rotterdam The Hague Airport increased by almost 9.4%. The attractions drew 4.1% more visitors. The number of visitors, together with a rise in domestic consumption, is expected to lead to a growth in spending within the city and thereby also growth in the economy and employment opportunities. Our conclusion is that the structure of the Rotterdam economy is now stronger than at the beginning of the recession. In recent years, the foundations have been laid for more jobs and more income in Rotterdam. The quality of the workforce has risen, the job market is strengthening and there is sufficient opportunity for entrepreneurship. More people are coming to Rotterdam. And this means more income. It may have taken a little longer than hoped, but things are looking up!
Figure 9: Stock exchange rises again Figure 1: Traffic jams Source: ANWB Traffic congestion km/min x 1 1.2 1. 8 6 4 2 27 29 21 212 213 Oct Oct 214 12 1 8 6 4 2 Number of records Rotterdam in traffic jam top 5 Figure 11: Office space ratio and utility space Source: Dynamis Figure 12: Quarterly number of accommodation transactions Source: NVM 43% Office space ratio 21 2% 18% 14% 9% 1% 18 15 12 9 6 1.. 29 21 211 212 213 Utility space Offer 9% 8% 7% 3 29 21 211 212 213 214-1 214-2 75. 6% 5% 4% 5. Intake 3% 2% 1% 25. 29 21 211 212 213 %