Strong institutions, advanced infrastructure, and a highly skilled workforce have helped the Netherlands remain resilient to recent economic shocks. The priority should now be to carry out structural reforms to strengthen investment, innovation and growth and sustain international competitiveness amid a challenging global landscape, according to a new OECD report.
The latest OECD Economic Survey of The Netherlands forecasts that GDP growth will be 1.3% in 2025 and 1.1% in 2026. Consumer price inflation will slow but remain elevated at 2.5% in 2026.
“Structural reforms will be key to addressing domestic challenges, such as labour shortages, housing affordability and electricity grid congestion, and preserving trade-driven prosperity,” OECD Chief Economist Alvaro Pereira said, presenting the Survey in The Hague alongside the Netherlands’ Minister of Economic Affairs Vincent Karremans. “Fiscal prudence will be important to maintaining strong public finances and supporting growth, including by allowing for productivity-enhancing public investments.”
Dutch public finances have long been among the strongest in the OECD. However, a recent shift in emphasis toward increasing purchasing power in the short run, and away from policies that support productivity, enhance competitiveness, and accelerate the green transition in the long run, risks undermining long-term growth. Proposed cuts to public spending on education and research and development should be reconsidered, and cost-effective public investment in knowledge, skills, and innovation should be increased.
The Netherlands is a small, open economy with a long-standing trade history which has brought large productivity and employment gains over past decades. Sustaining its trade competitiveness will require further reforms to strengthen supply chains, leverage digitalisation for trade and improve the domestic business environment to boost innovation.
The ongoing update of the country’s industrial strategy is an opportunity to foster innovation and competition. Support measures should be transparent and procompetitive, avoiding excessive market interventions that favour incumbents or discourage new entrants.
House prices have increased, as supply has not kept up with demand. Shifting policies from supporting home ownership to increasing housing supply would improve affordability. Generous tax incentives for homeownership should be gradually reduced, and supply could be boosted by streamlining permitting and land-use policies.
A long-term strategy is urgently needed to strengthen the private rental market, including a clear timeline for gradually phasing out rent controls and the ban on buy-to-let properties.
The country’s international competitiveness will increasingly depend on its ability to adopt low-carbon technologies and adapt to climate change. The government has an ambitious climate agenda, but more needs to be done to reach 2030 climate targets and net zero by 2050. Phasing out reduced rates and exemptions on the use of fossil fuels would help.
Enhancements to the electricity grid are needed to absorb the ongoing rise in variable renewable energy. Procedures and delivery for grid expansion need to be expedited, including by facilitating coordination between government agencies, system operators, and end users.
See an Overview of the Economic Survey of The Netherlands with key findings and charts (this link can be used in media articles).
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