Fair wind for Dutch businesses in 2015
Some sectors to benefit from new income models
The Dutch economy is ready to go. ABN AMRO expects the economic growth in 2015 to approximate 2 percent, and in most sectors the growth rate will reach the highest levels in years. However, some sectors will not yet see their profitability recover fully, either through overcapacity or because companies are being forced to consider new income models as consumers change and technology becomes ever more prevalent. This is ABN AMRO’s conclusion in its Vision on Sectors 2015, published today.
Full steam ahead for businesses, consumers as an added engine
In 2015 economic growth will no longer be driven solely by exports. Capital expenditure and consumption are both on the rise. The principal change in 2015 is that consumer spending is up slightly, giving the economy an additional engine. Consumer confidence is at the highest level in eight years. This optimism is also boosted by low inflation (which benefits purchasing power) and the turnaround on the housing market, to the benefit of sectors such as leisure, retail and construction. Capital expenditure is rising as businesses gain more confidence in encouraging sales prospects for their products. The low interest rates mean that costs of financing are minimal, which is good news for companies focusing on manufacturing and/or selling investment goods: from machinery to transportation. Although exports have been favourable for some time now, the low euro is adding another boost. The principal beneficiaries are the agricultural sector, food, industry and transport.
Profitability still an issue in some sectors
Despite this growth, businesses in some sectors will find it difficult to improve their profitability. ‘This might be because of overcapacity, for example, or because of major structural changes,’ says Jacques van de Wal, head of ABN AMRO’s Economic Desk Netherlands . ‘Retail in fact combines these two reasons: the rise of online retail means that there are too many shops. Despite the increasing revenues, brick-and-mortar shops need to look for alternative concepts for long-term profitability.’ ABN AMRO also expects that the growth in other sectors such as construction and some transport modalities will not automatically translate into improved earnings, in light of the high level of competition.
Lasting growth through innovation and new income models
Besides overcapacity, many sectors are experiencing structural changes that call for new income models to achieve long-term profitability. For example, new income models based on the Cloud and the emergence of online marketing spell growth for the TMT sector. In the transport industry, the demand for modern distribution centres is rising, owing to the rapid growth of e-commerce. The construction and healthcare sectors will change as a result of the aging population. With people continuing to live in their homes for longer, the demand for specific types of home and care will also shift. ‘To ensure long-term growth further down the road, sectors need to invest in partnerships and innovation, enabling them to respond quickly to the changes that the market demands from them.’