Growth of the Dutch economy will slow from 4.5% in 2022 to 0.8% in 2023, inflation will fall to 4.2% and house prices will drop by 5.1%, according to our projections for 2023.
After a record high of 11.6% last year, inflation is projected to come down to 4.2% in 2023. We expect inflation to fall further to 3.7% in 2024, hitting closer to the 2% target at 2.5% by 2025. Central bank interest rate hikes have been a major contributor to this.
For inflation to fall further, it is important for the economy to cool more. We expect economic growth of 0.8% in 2023 and 1.3% in 2024. Employers and employees can help dampen inflation by managing growth in profits and wages. The government would be wise to keep a tight grip on public finances.
Unemployment should remain low at 3.6% this year and 3.7% in 2024. Price increases and labour shortages in various sectors will drive up wages by 5.7% in 2023. For 2024, we also expect substantial wage growth of 5.4%, only to moderate to 3.7% in 2025.
For years, house prices have been rising sharply. That situation came to an end in mid-2022. This year, we expect house prices to fall by 5.1%, and we expect a further drop of 3.8% in 2024. Higher mortgage loan rates are making it harder for homebuyers to finance a property. For 2025, our projections show that house prices will show an 0.2% uptick, due in part to higher wages.
We issue projections for the Dutch economy over the current and the next two years. These concern economic growth, inflation, consumption, housing and the labour market. We develop them together with the European Central Bank (ECB) and other central banks in the euro area. The ECB aggregates national projections into macroeconomic projections for the euro area as a whole. This is how we contribute to the ECB’s decision-making on monetary policy. And every six months we present our national projections and analyses in the Economic Developments and Outlook. Based on our projections and analyses, we provide advice on economic issues to the government and other policymakers. Our Economic Developments and Outlook and our studies provide insight into the basis of our advice.
The DNB business cycle indicator allows us to identify changes in Dutch economic developments up to six months ahead. We look at consumer confidence in economic conditions, expected business activity in Germany, new manufacturing orders, manufacturing materials procurement and interest rates.
We prepare our projections for the Dutch economy with a macroeconomic model named DELFI. We also use it to assess the consequences for the Dutch economy of changes in economic policy or economic conditions. Would you like to try this out, too? Get behind the controls of the Dutch economy with our DELFI-Tool and discover, for example, the consequences of higher energy prices or higher wages.
We regularly publish studies, news releases and speeches on current economic topics. You can find these under ‘Interesting articles’ on this page, under ‘Publications’ or by using the search option.
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