Dutch economy shows remarkably higher growth

The economy has been less affected by uncertainty in world trade this year than previously expected. Trade agreements have eased international trade tensions somewhat, although economic and geopolitical uncertainty remains elevated. Economic growth in 2026 (1.2%) and 2027 (1.1%) is projected to be lower than this year, but growth in 2026 will also be higher than in our Spring Projections.

Higher world trade growth

The higher-than-expected economic growth can be explained predominantly by increased government expenditures and higher world trade growth. Public sector employment has grown more than expected. Public expenditures have thus contributed to the higher economic growth. World trade growth is projected to increase in 2025, despite higher US trade tariffs. This is partly because some companies anticipated these tariffs by frontloading foreign trade, which has been to the benefit of the open Dutch economy.

Olaf Sleijpen, President of DNB, noted: “Our economy has once again shown its resilience. By anticipating the trade tariffs, companies have given the economy an adrenaline rush over the past year. The government must now create the conditions for higher and lasting economic growth by removing bottlenecks.”

Inflation falls, but remains relatively high

Although inflation in the Netherlands is on a downward path (from 3.0% this year to 2.4% in 2026 and 2.3% in 2027), it is set to remain higher than the euro area average. However, this inflation differential is narrowing.

Average wage rises are outpacing inflation, boosting real household incomes.  This income growth is supporting the growth in private consumption. At the same time, households will continue to save considerably in the coming years to pay off mortgage debt or to purchase a home of their own. House prices are projected to rise by 8.5% in 2025 and slow their climb thereafter, although they will still rise more than household incomes.

Budget deficit increases

The government budget deficit is projected to remain high at 1.9% this year and grow to 2.9% in 2026. This is within the EU norm, but fiscal policy is too expansionary given the state of the Dutch economy. Government spending is further fuelling demand in the economy and thus putting upward pressure on the relatively high rate of inflation in the Netherlands. Public debt as a percentage of gross domestic product (GDP) is set to rise from 45.2% in 2025 to 48.2% in 2027.

What if the government were to tackle structural bottlenecks?

We present a scenario in the Autumn Projections in which the government addresses structural bottlenecks in the economy such as nitrogen emissions challenges and the overloaded energy grid.

In this scenario, households and businesses become more confident in the economy. Households spend more of their disposable income, and businesses invest more readily. Addressing structural bottlenecks would also promote productivity growth, thus boosting potential economic growth (earning capacity) in the Netherlands.

In this scenario, growth picks up and inflation remains virtually unchanged. GDP growth would then be 1.6% in 2026 and 2027, which is about 0.4 percentage points higher on average than in the projections.

Recommendations

In the Autumn Projections, we make a number of recommendations for government policy.

The first recommendation is to vigorously tackle the constraints on Dutch growth potential. Companies that want to invest in the Netherlands face uncertain government policies, unresolved nitrogen emissions challenges and an overloaded energy grid. The new Cabinet should take swift action to resolve these chokepoints. The results of the scenario presented in the Autumn Projections show the positive effects of such decisive measures. 

Second, we recommend working harder and faster to bolster Europe’s competitiveness. There are plans aplenty, but there is insufficient impetus to implement them, either in Brussels or in the individual EU Member States. Further development of the European single market and the savings and investment union requires a decisive approach that transcends national interests.

Our third recommendation to the Cabinet and House of Representatives is to ensure that public finances remain sound. Expansionary fiscal policy encourages spending, which leads to higher inflation. Furthermore, structural public expenditures must be covered on a structural basis. The new government must also take serious steps towards creating a future-proof tax system and reforming social security and healthcare programmes that are bound to expand due the ageing population.

Media representatives can contact Bouke Bergsma by telephone at +31 653 258 400 or by email at bouke.bergsma@dnb.nl.