The Dutch economy is projected to experience moderate growth in 2025, driven by increased consumer spending and government investments. However, global geopolitical tensions and potential trade disputes pose significant risks to this outlook.
Economic growth outlook
According to the Netherlands Bureau for Economic Policy Analysis (CPB), the Dutch economy is expected to grow by 1.9% in 2025 and 1.5% in 2026. This marks an upward revision from earlier forecasts, reflecting stronger-than-anticipated wage growth and robust domestic demand.
Rabobank’s projections align closely, anticipating a 1.5% growth rate for both 2025 and 2026. The bank attributes this growth to increased household consumption and government spending, particularly in sectors like healthcare, defence and infrastructure.
Consumer spending and purchasing power
Consumer spending is set to be a primary driver of economic growth. Rabobank forecasts a 2.2% increase in household consumption in 2025, followed by a 2.1% rise in 2026. This uptick is largely due to wages outpacing inflation, leading to improved purchasing power.
The CPB also notes that wage growth is expected to continue exceeding inflation, contributing to a reduction in poverty levels from 3.5% in 2024 to 2.9% in 2026.
Inflation trends
Inflation in the Netherlands remains above the eurozone average. The Dutch Central Bank (DNB) projects inflation to hover around 3.2% in 2025, gradually declining to 2.8% in 2026. Factors contributing to this persistent inflation include strong domestic demand, high wage growth and increased taxes on items like tobacco and hotel accommodations.
Labor market dynamics
The Dutch labour market continues to exhibit tightness, with unemployment rates expected to remain low. The European Commission forecasts unemployment to rise marginally from 3.7% in 2024 to 3.8% in 2025 and 3.9% in 2026. This tight labour market supports wage growth but also poses challenges for employers seeking to fill vacancies.
Investment and government spending
Government spending is anticipated to play a significant role in economic growth. Rabobank projects government consumption to increase by 2.0% in 2025 and 1.5% in 2026, driven by rising healthcare costs in an ageing society. Public investment is also expected to grow, focusing on infrastructure, energy transition and defence.
Business investment, however, may face headwinds. Rabobank notes a potential dip in 2025 due to changes in tax exemptions for fuel-engine commercial vans, which could lead to a temporary decline in vehicle investments. Nonetheless, investment is expected to rebound in 2026 as companies adapt to new regulations and market conditions.
Risks and uncertainties
Despite the positive outlook, several risks could impact the Dutch economy. DNB warns that escalating trade tensions, particularly between the US and Europe, could significantly hamper growth. If a trade war were to materialise, Dutch economic growth could slow to 0.4% by 2026, with negative effects on exports, investments, employment and consumer spending.
The CPB echoes these concerns, estimating that US tariffs could reduce Dutch economic growth by one percentage point through 2026. Investments would be the most affected by increased global economic uncertainty.
The Dutch economy is on a path of moderate growth, supported by strong domestic demand and government spending. However, persistent inflation and potential global trade disputes present significant challenges. Policymakers and businesses will need to navigate these uncertainties carefully to sustain economic momentum in the coming years.
Written by Priyanka Sharma