As much of the rest of Europe tries to tackle rampant financial problems and growing debt, the Netherlands is actually shrinking its rate of borrowing. The belt-tightening, however, may be too little, too late.

iShares MSCI Netherlands (NYSEArca: EWN), like the Netherlands economy, has been a mixed bag this year. More hurdles may be in store:

  • Netherlands’ budget deficit will likely edge up to 4.1% of GDP from an early forecast of 3.9% as slower world trade, government spending cuts and weak domestic consumption weighs down the economy, reports Gilbert Kreijger for Reuters.
  • The Netherlands’ Bureau of Economic Policy Analysis (CPB) expects a 5.8% budget deficit for 2010 and cautions that slower international growth will hold back the country’s economy – around 70% of Netherlands’ GDP is based on exports. The CPB projects growth of 1.5% in 2011 and 1.75% for this year.
  • According to 4Hoteliers, the Netherlands has to work with an aging population and a diminishing pool of workers, which would reduce future potential growth.

The Netherlands will reduce the amount it will borrow to $155 billion next year as the government tries to reduce its budget deficit, writes Jurjen van de pol for BusinessWeek. The government hopes that austerity measures and recovering tax income will further reduce next year’s budget deficit to 4% of GDP, which is above the E.U.’s 3% ceiling for a second consecutive year.

The Netherlands looks like it’s doing all it can to get spending under control, which may mean weakness in the short-term. EWN is up just 1.4% year-to-date, which given Europe’s troubles this year, is no small feat.

For more information on the Netherlands, visit our Netherlands category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.