OECD Economic Outlook, Volume 2025 Issue 2

Netherlands

GDP is projected to grow by 1.4% in 2026, before strengthening to 1.6% in 2027 supported by domestic consumption and a gradually improving global trade environment. Investment will pick up as the delayed effects of monetary easing and lower borrowing costs feed through. Annual headline inflation is set to fall from 2.9% in 2025 to 2.1% in 2027, with underlying price pressures easing as nominal wage growth moderates. Labour market conditions will remain tight, with unemployment rising marginally from 3.9% in 2025 to 4.1% by end-2027.

The fiscal stance is expected to remain broadly neutral over 2025–27, reflecting lower personal and environmental taxes alongside a shift of planned expenditure to later years. To support growth amidst constrained labour supply, the government should prioritise productivity-enhancing investment and foster a more dynamic business environment by simplifying business registration and strengthening the insolvency framework.

The economy remains resilient

GDP grew by 0.4% quarter‑on‑quarter in the third quarter, up from 0.3% in the second quarter, driven mainly by higher public consumption and improved net exports. Export growth picked up while imports slowed, resulting in a larger trade surplus. Headline inflation remained at 3% in October, reflecting price pressures from energy and food. The labour market remained tight but showed signs of cooling, with job vacancies declining and unemployment edging up slightly to 4% in September. Consumer and business confidence have both improved since April but remain below long-term averages amidst persistent uncertainty.

Netherlands

1. Year-on-year growth rates.

Source: OECD Economic Outlook 118 database.

Statlink

Netherlands: Demand, output and prices

Statlink

As a highly trade-dependent economy, the Netherlands is exposed to shifts in global trade dynamics. About 5.7% of Dutch goods exports were shipped to the United States in 2024, but major export products such as semiconductor manufacturing equipment remain exempt from recently increased US tariffs on EU goods. Dutch trade continues to benefit from its strong integration within the EU single market, but activity is nonetheless indirectly affected by subdued global trade due to the Netherlands central role in European logistics and deep integration in global value chains.

Fiscal discipline is maintained in the short term

Fiscal policy is assumed to remain broadly neutral over 2025-27, as the caretaker government is expected to avoid major policy decisions until a new government is formed following the October 2025 general election. The budget deficit is projected to widen from 2.3% of GDP in 2025 to 3% in 2026 due to a one‑off transfer of military pensions to the Dutch civil service pension fund, before narrowing again to 2.3% in 2027. The reduced income tax bracket beginning in 2025 and the extension of the fuel tax cut into 2026 are set to reduce revenues, and while defence spending is set to rise, some expenditure has been deferred to later years amid persisting labour shortages. Public debt (Maastricht definition) is projected to rise from 44.4% of GDP in 2025 to 47.5% in 2027.

Growth is set to improve but domestic uncertainty persists

Real GDP is forecast to rise by 1.7% in 2025 and 1.4% in 2026, before strengthening by 1.6% in 2027. This strengthening is supported by net exports as global trade improves and private consumption, which will benefit from government measures introduced at the beginning of 2025 to boost purchasing power and rising real incomes as inflation eases. Investment growth is projected to increase gradually, as the delayed effects of monetary easing and lower borrowing costs feed through, alongside rising defence spending. Annual headline inflation is expected to fall from 2.9% in 2025 to 2.1% in 2027. Labour market conditions will remain tight, with unemployment rising slightly from 3.9% in 2025 to 4.1% by end-2027 as employment growth slows. The outlook is surrounded by significant risks. Prolonged coalition talks after the general election could heighten policy uncertainty and delay investment. The direction of fiscal policy under a new coalition adds further uncertainty. Measures aimed at supporting household purchasing power could raise inflation, potentially eroding price competitiveness, reducing real incomes, and slowing private consumption.

A more dynamic business environment would support growth

The Netherlands maintains a strong fiscal position, but medium-term sustainability will come under pressure from population ageing, the substantial investments required for the green transition and supply constraints weighing on potential growth and revenues. Amidst persistent labour shortages, a more dynamic and innovative business environment is needed to support productivity growth. Simplifying business registration and reducing unnecessary regulatory complexity, such as removing potential duplication, would particularly benefit small and medium-sized enterprises, which often face higher compliance burdens due to limited administrative capacity. Further strengthening the insolvency framework could lower the cost of business failure and foster a more dynamic entrepreneurial environment. In parallel, improving digital skills and encouraging the uptake of digital technologies particularly among smaller firms would help to support productivity growth and competitiveness over the longer term.