Dutch economy keeps pace, but growth drivers are gradually shifting
The Dutch economy maintains a solid growth trajectory, driven primarily by export demand and rising investment, although inflationary pressures are dampening consumer spending and shifting growth dynamics. Per the full note from ING, the revised GDP growth forecast for 2026 is now 1.4%, reflecting a boost from the global AI investment cycle despite higher energy prices adversely affecting long-term projections. As the Dutch economy grapples with an increased inflation expectation of 2.9% for 2026, the FX desk remains cautiously optimistic, noting the implications of this growth on the EUR/USD. With no immediate high-impact events on the calendar, traders should remain alert to shifts in consumer confidence and inflation data as we approach year-end.
What the desk is arguing
The desk argues that while the Dutch economy is growing at a decent pace, the dynamics are shifting towards greater reliance on exports and investments rather than domestic consumption. Per the full note from ING, the forecasts for GDP growth reflect improved export demand, specifically linked to advancements in AI technology.
Supporting this viewpoint, the desk highlights a revised GDP growth of 1.4% for 2026, indicating a rebound in industrial production and stronger export performances amidst fading consumer confidence due to inflation. The expectation of HICP inflation rates at 2.9% for 2026 suggests that purchasing power will be a critical factor influencing economic activity moving forward.
Where it sits in our coverage
Our consensus target for EUR/USD is set at 1.075, with a range spanning from 1.04 to 1.12. Firms contributing to this consensus include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
The desk's view aligns closely with jpmorgan, positioning slightly above the firm’s target, while diverging from the more conservative outlook of bofa. This suggests that the desk is optimistic compared to the low end of the market forecasts.
How other firms see it
Analysis shows that jpmorgan and other aligned firms share a positive bias on the EUR/USD given the upbeat export forecasts. In contrast, bofa holds a more bearish stance, indicating potential downside risks for the pair.
Traders should monitor the EUR/USD closely, especially in light of the implications of adjustments from the ECB regarding interest rates and inflation figures.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Dutch economy projected to grow by 1.3% in 2027 and 1.4% in 2026 driven by exports and investments.
- 02HICP inflation expected to rise to 2.9% by 2026, weakening household purchasing power.
- 03Shift from consumer spending to investment and export-led growth marks changing economic landscape.
- 04High energy prices remain a concern, potentially limiting investments and growth sustainability.
Market implications
Watch the EUR/USD movements closely, particularly as inflation data and consumer confidence indicators could significantly impact the trajectory of the currency pair. The current consensus positions traders near the upper end of forecasts, necessitating vigilance as inflation could push the trend downward.
Risks to this view
The primary risk to this outlook would be a sharper-than-expected decline in consumer confidence, or an unexpected downturn in inflation which could prompt a reassessment of the growth narrative. Prolonged energy price hikes could also lead to a more cautious approach to investment, thereby straining economic growth.
Articles Dutch economy keeps pace, but growth drivers are gradually shifting Published 13:45 The Netherlands Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download The Dutch economy continues to grow at a decent pace. While somewhat higher inflation and interest rate expectations moderated the outlook for 2027 a bit, expectations for 2026 have improved on the back of continued strong export demand Marcel Klok Persistently low consumer confidence in the Netherlands has been trending upwards in recent months Higher inflation slightly weakens the 2027 growth outlook Higher energy prices in this month’s baseline have slightly weakened the outlook for the Dutch economy for 2027. We raised our HICP inflation expectation for 2026 and 2027 to 2.9% and 2.7%, respectively, with less benign price developments for energy, fuel and food.
Higher inflation is eroding purchasing power developments towards the end of 2026 and the first half of 2027 more than initially expected. Together with persistent uncertainty over the Gulf region and somewhat higher long-term rates, this is likely to temper investment growth. Still, we expect moderate growth for next year, with GDP expanding around 1.3%.
While the growth contributions of public spending and household consumption will probably be lower than this year due to the start of austerity measures and declines in household purchasing power, investment and exports are expected to contribute more. As stronger investment growth will be driven in part by imports of defence equipment, import growth is also expected to pick up. Stronger exports push up the 2026 forecast By contrast, the outlook for 2026 has improved on balance, with GDP growth now forecast at 1.4%.
The improvement is mainly driven by stronger export expectations, as the Netherlands continues to benefit from the global AI-related investment cycle. This is reflected in more optimistic production expectations in industry. More specifically, semiconductor machinery manufacturer ASML has raised its turnover forecast from €36-40bn to €43-45bn.
On a mechanical basis, and depending on the timing of deliveries, ASML’s higher turnover alone could raise the Dutch GDP growth forecast for 2026 by around 0.2-0.3 percentage points, because the domestic value-added content of these sales is significant. Slightly stronger-than-expected second-quarter GDP data also lifted the annual forecast, while persistently low consumer confidence has been trending upwards in recent months. This was only partially offset by our minor downward revision for the second half of the year, driven by higher inflation and interest rate expectations.
Stable growth masks a changing economic mix On balance, the economic outlook has changed marginally. Despite the upward revision, GDP growth in 2026 is still expected to be slightly slower than in 2025, while growth in 2027 should proceed at a similar pace. That apparent stability masks a shift in composition: exports and investment are becoming more important growth drivers, while the contributions from household consumption and public spending are gradually diminishing.
That said, all expenditure categories are expected to contribute positively to economic growth in both years, apart from inventory investment. Steady as she goes! The Netherlands Investment Interest rates Inflation Government spending 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 Higher inflation slightly weakens the 2027 growth outlook Stronger exports push up the 2026 forecast Stable growth masks a changing economic mix
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