The Dutch economy is forecast to grow by 2.1% in 2025, followed by a slower pace of 0.8% in 2026, according to new analysis from ING. While domestic demand remains strong, the Netherlands faces mounting external risks, primarily due to escalating global trade tensions and front-loaded investments that will dampen future growth momentum.
The economy has recovered robustly from the energy crisis, with GDP in the final quarter of 2024 standing 1.3% above its pre-crisis peak. 'Underlying quarterly growth rates of several expenditures were more volatile recently than in other countries,' noted ING Senior Economist Marcel Klok, pointing to 'fiscally-driven front-loading of purchases of electric cars and especially of light transportation equipment,' and 'the large depletion of gas reserves.'
Consumer spending remains a key pillar of growth, underpinned by rising real incomes and supportive government measures, despite low consumer confidence driven by "perceptions about high prices" and "concerns about geopolitical developments." ING's transaction data shows "moderately growing nominal discretionary spending by households" in early 2025.
However, the global trade environment poses significant risks. The ongoing trade war, particularly US tariffs on European goods, is expected to hit Dutch exports and business sentiment. 'For the Netherlands, we have estimated the direct negative trade effect... to be -0.1% GDP for the short run (which could deteriorate to -0.3% over time),' said Klok. He added, 'Trade barriers reduce efficiency while uncertainty hurts confidence, spending, and potentially affects financing costs and stability.'
Investment patterns are also expected to fluctuate. After strong transport-related investment in 2024, a "moderate restart" of productive capital investment is projected from the second quarter of 2025. Inventory rebuilding, particularly of gas reserves, will significantly influence GDP figures early in the year. 'This will result in a very large contribution of inventory investment to GDP growth in early 2025,' Klok stated.
Labour shortages remain a constraint on economic capacity. The unemployment rate is forecast to remain low, at 3.9% in 2025 and 4.1% in 2026. Klok highlighted that 'the growth of labour supply is slowing,' citing demographic factors and limited structural participation growth.
Inflation is projected to stay elevated, with HICP inflation at 3.1% in 2025 and 2.5% in 2026. High wage growth, estimated at 4.5% to 5%, is expected to keep service sector prices elevated. 'Selling price expectations are still above historical averages,' Klok observed, adding that recent policy measures and tax adjustments are also contributing to the persistent inflationary pressure.
While upside risks include potential stimulus from Germany and a reduction in household savings if confidence rebounds, the outlook remains cautious. 'A recession in the US would hurt global demand and Dutch exports and investment,' Klok warned. 'If such a scenario were to play out severely, it could increase business closures, raise unemployment, and hit consumer spending in the Netherlands.'
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