Despite a softer economic outlook and rising costs, activity in the Netherlands remains resilient
The Dutch economy is showing surprising resilience despite a backdrop of heightened costs and a dimmer outlook, as noted in recent commentary. Per the full note, businesses are exhibiting pessimism regarding the broader economic landscape while maintaining confidence in their own activities, suggesting an internal divergence that may lead to subdued growth moving forward. Encouraging monthly data, like a 4.4% year-on-year increase in goods exports for April and a manufacturing PMI uptick to 55, hint at potential stabilization, although caution is warranted given the broader uncertainties related to rising energy costs. In combination, these factors shape our expectations for the EUR/USD pair, particularly as we analyze the market's response in the months ahead.
What the desk is arguing
The desk posits that while the Dutch economic environment is clouded by rising costs and external pressures, the internal confidence of businesses may mitigate some of this pessimism. Per the full note, Dutch businesses have noted a slight decline in overall confidence, yet expect their own performance to remain stable amidst these challenges.
Recent economic indicators further bolster this outlook; April's data reflected a notable 1.3% month-on-month rise in manufacturing production, alongside robust growth in export volumes. Notably, the manufacturing PMI rose to 55, indicating potential for continued growth, at least in the short term.
Where it sits in our coverage
Our consensus target for EUR/USD is currently set at 1.075, with a range of 1.04 to 1.12. Aligned firms include:
- jpmorgan: 1.10 target for Mar26.
This aligns with jpmorgan, which forecasts a stronger outlook than some other banks. The outlook from firms like bofa, targeting 1.04 for Mar26, suggests a divergence in sentiment.
How other firms see it
Firms aligned with our perspective include those expecting stability in the medium term, focusing on signs of resilience in the Dutch economy. Conversely, firms like bofa, with a more cautious stance, reflect concerns that current confidence may not translate into broader economic growth.
The movements in EUR/USD may closely track developments in the Dutch economy, particularly indicators like the PMI and export growth rates, which serve as essential signals of economic health moving forward.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Dutch businesses show resilience despite a softer economic outlook.
- 02Manufacturing PMI rises to 55, signaling potential growth.
- 03Goods export growth of 4.4% year-on-year in April offers a positive data point.
- 04Divergence in outlook between general economic sentiment and individual business performance.
Market implications
Watch for EUR/USD movements as economic indicators from the Netherlands, such as the manufacturing PMI and export data, continue to unfold. Key levels to focus on will be the support at 1.04 and resistance at 1.12.
Risks to this view
A significant decrease in manufacturing output or export volumes, perhaps driven by external factors like geopolitical tensions or a deeper downturn in consumer confidence, could invalidate the current optimistic outlook for the EUR/USD pair.
Articles Despite a softer economic outlook and rising costs, activity in the Netherlands remains resilient 16:27 The Netherlands Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Dutch businesses have become more pessimistic about the economic outlook as energy costs are elevated, yet short-term expectations for their own activity have held up relatively well. This divergence points to uncertainty, suggesting that economic growth will remain subdued in the quarters ahead Marcel Klok Even though Dutch businesses are pessimistic on the economic outlook, they are more more confident on their own outlook Some solid monthly data The first hard data for second quarter 2026 suggest that it might not be such a bad quarter for GDP, with the possibility of stronger growth than in the first quarter. Goods export volumes growth accelerated to 4.4% year-on-year in April, while the expansion of goods imports dropped to 1.2% YoY.
Manufacturing production rose by a considerable 1.3% month-on-month in April, mainly due to the continuing strong growth in machinery and a strong recovery in electronics. And the manufacturing PMI rose further to a level of 55, indicating decent growth for the rest of the quarter. Encouraging was the fact that the rise in PMI was visible in almost all underlying indicators.
Divergence in own outlook vs. wider outlook The quarterly business cycle survey among Dutch firms in the entire business economy by Statistics Netherlands and partners from April – the first survey since the start of the war in Iran – suggested considerably more pessimism about the economy at large. The survey also showed only a slight decline in firms' confidence in their own outlook. Most significant for the expectation of their own situation is a fall in purchasing orders.
Turnover, employment, export and investment expectations have deteriorated only to a mild extent since the start of the Iran war and remain (albeit slightly) very close to their long-term averages. Firms’ assessment of their competitive position even improved. Perhaps Asia suffers more from disrupted energy flows originating from the Gulf.
While Dutch businesses became much more pessimistic about the economic climate, the expectations of their own situation has deteriorated much less Normalised indicator* for the development over the next three months (only for investments in the current year), according to businesses** based on a quarterly survey Source: CBS, EIB, KvK, MKB Nederland and VNO-NCW, calc. ING Research; *Seasonally adjusted responses, weighted by business size, expressed as the percentage of positive minus negative responses, normalised to one standard deviation of the long-term average. Inclu "> Source: CBS, EIB, KvK, MKB Nederland and VNO-NCW, calc.
ING Research; *Seasonally adjusted responses, weighted by business size, expressed as the percentage of positive minus negative responses, normalised to one standard deviation of the long-term average. Inclu Investment neither plummeting nor buoyant Although it was interesting to see that investment expectations of firms only fell a little, our forecast for capital expenditures was already at a subdued level. The expenditures are hindered by geopolitical tensions, structural constraints like nitrogen emission restrictions, electricity grid congestion, and increased competition (e.g.
China). Public (housing and defence) investment is rising though, while structural factors such as population ageing push healthcare spending higher, is helping to keep economic growth going. Planned austerity measures to accommodate higher defence spending won’t take effect before 2027 and have so far received little support.
Most notably, the proposed increase in the statutory pension age was rejected. That means that public spending remains a boost to GDP growth this year, albeit less so than in 2025, while uncertainty about the fiscal drag in 2027 remains. Downbeat consumer not in lowest gear Despite some looming tax increases that should finance higher defence spending next year, Dutch households’ financial position on average remains decent so far, despite rising inflation.
Wage growth is still high (4.2% YoY in May) and unemployment fell (3.9% in April), containing the risk of extreme precautionary behaviour. This might explain why consumption hasn’t really collapsed, despite low consumer confidence and higher inflation. Domestic consumption volumes were still 1% up YoY in April, from 0.9% in March.
Nevertheless, we expect the savings rate to remain high going forward, as real income developments deteriorate amidst a low-confidence environment. Unchanged outlook with risks remaining All in all, it still looks like Dutch GDP growth could be higher in 2Q26 than in 1Q26. We had that already pencilled into our forecast.
So, the Dutch economy still seems to continue to grow at a below-normal pace in the current and upcoming quarter, leading to a mediocre 1.0% GDP growth in 2026 after a solid 1.8% in 2025. With low consumer confidence, uncertainty about the situation in the Gulf region and lower (price) momentum in the housing market, risks to the outlook remain, but currently, there are still no clear signs of a serious recession in the Netherlands. Investment Inflation GDP Exports Consumption Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives.
The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Author Marcel Klok Senior Economist, Netherlands Marcel Klok is a Senior Economist at ING Netherlands. Based in Amsterdam, he covers the Dutch economy.
A graduate of the University of Groningen, Marcel has worked for the Ministry of Economic… In this article Some solid monthly data Divergence in own outlook vs. wider outlook Investment neither plummeting nor buoyant Downbeat consumer not in lowest gear Unchanged outlook with risks remaining
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