Dutch Economy Expected to Grow by 1.5% This Year

The Dutch economy is expected to grow by 1.5% this year and by 1% in 2026, according to Rabobank, a Dutch multinational banking and financial services company headquartered in Utrecht in the Netherlands.

In its latest research, Rabobank said that compared with other European countries, the Dutch economy has grown relatively fast in recent years, mainly due to growth in the household and government consumption. However, exports and business investment were lagging behind.

The household income has grown thanks to a persistently tight labour market and rising real wages, and this boosted consumption, which is expected to increase by 1.3% and 1.9% in 2025 and 2026, respectively.

The research also said that business investment was lagging behind possibly due to the uncertainty about, among other things, geopolitical tensions, grid congestion, nitrogen problems and the fall of the Dutch Prime Minister Hendrikus Wilhelmus Maria ‘Dick’ Schoof’s cabinet. Contraction in 2025 (-0.1%) will be followed by recovery in 2026 (+1.5%).

“Housing investment is expected to grow by 2.7% this year and by 1.4% in 2026. Permits are falling, the construction of new homes is stagnating and the selling off of investor homes is creating competition for new construction,” the research said.

The government will remain an important driver of economic growth in the coming years and Rabobank expects the government spending growth of 2.5% this year and 1.1% in 2026 as the national budget contains sufficient provisions for this growth.

Exports are expected to grow by 2.3% this year and 1.4% in 2026, but will lag behind global demand. Dutch exporters are losing relative ground in the markets where they operate. The US import tariffs, increased, the bank said.

Protectionist Policies

According to Rabobank, the global economy continues to be weighed down by high uncertainty and protectionist policies and the Dutch economy is also impacted on this account.

The trade war with the US is increasingly starting to crystallize. In the new trade agreement between the US and the EU, a maximum American import tariff of 15% has been agreed on most goods, without European countermeasures.

In addition, the EU has pledged to buy US goods – including defence equipment and energy – and has pledged to invest some $600 billion in the US. For exporting and importing companies, this provides some clarity, but enough uncertainty remains.

The US and the EU will negotiate the further details of the agreement in the coming months. As a result, it is likely that companies will remain cautious with investments, as things can still change within the agreed frameworks.

In addition to these uncertainties, some domestic developments are also causing uncertainty. The fall of the Schoof cabinet has increased uncertainty about future government policy. Even without that cabinet fall, however, there was already uncertainty about what the policy will look like in the future.

This policy uncertainty can discourage businesses and consumers from making long-term decisions, resulting in lower economic activity, which is likely to affect investment and the production of durable goods.

An upside risk comes from the government. The proposed higher defence spending as a result of the increased NATO standard will stimulate economic growth in both the short and long term – depending on the quality of implementation. A relatively quick cabinet formation can also give an extra boost to growth.

Marginal Growth in Q2

In the second quarter of this year, the Dutch economy grew slightly, by 0.1% compared to the previous quarter, according to Statistics Netherlands (CBS).

In the first quarter, gross domestic product (GDP) growth was 0.3% (quarter-on-quarter; QOQ). In (geo)politically difficult times, the Dutch economy has managed to avoid contraction, but the growth of 0.4% in six months remains below potential.

In the second quarter, it was mainly government spending and business investment that made a positive contribution to growth. The latter showed some recovery after a weak first quarter, in which the purchase of company cars fell sharply due to tax changes that made the purchase more expensive. Stocks also grew substantially, but this is offset by large amounts of imports. Therefore, the impact on economic growth is limited.

Household consumption increased only slightly. The growth from the first quarter was almost completely offset in the second quarter. Households mainly spent less on accommodation and food services, recreation and clothing, the research said.