Dutch growth getting more traction, with surprising investment and strong export growth
The desk notes that Dutch economic growth has accelerated more than previously expected, with GDP expanding 0.4% quarter-on-quarter in Q2, underpinned by stronger household consumption and exports. Per the full note from ing-think, the growth was bolstered by a surprising investment uptick and increased export volumes, particularly in machinery and food. As we view this economic resilience positively, it suggests a potential near-term supportive backdrop for the euro against other currencies, particularly as we anticipate EU monetary policy adjustments. Current consensus forecasts position EUR/USD in a 1.04 to 1.12 range, which reflects the mixed outlook amid elevated inflation concerns.
What the desk is arguing
The desk frames this as a turning point for the Dutch economy, indicating that the recent data provides a stronger foundation for the euro. This shift in growth dynamics reveals a rebound in public and household consumption, alongside an increase in exports, which saw notable advancements in machinery and food exports.
Specifically, the report highlights that exports turned around from a minor contraction to a substantial rise of 1.2% quarter-on-quarter, lending support to the overall economic outlook. The surprising 0.5% growth in investment, contrary to early indicators that suggested a decline, is particularly noteworthy, as it points to increased confidence among businesses.
Where it sits in our coverage
Our current consensus target for EUR/USD is 1.075, with a range between 1.04 and 1.12. Notably, several firms have provided distinct outlooks, including: - jpmorgan: Target of 1.10 for Mar26 - bofa: Target of 1.04 for Mar26
This viewpoint aligns closely with jpmorgan's target, which is near the upper bound of the range, hinting at optimism regarding the euro's performance in the coming months.
How other firms see it
The prevailing sentiment among aligned firms, such as jpmorgan, reflects a bullish stance on EUR/USD, driven by the recent strong economic indicators from the Netherlands. However, contrary views exist with firms like bofa predicting a more cautious trajectory for the euro, emphasizing the risks of persistent inflation and potential tightening from central banks.
Watch EUR/USD dynamics closely, particularly as the interplay with broader eurozone economic data continues to unfold. Indicators of inflationary pressures or shifts in central bank strategy will be critical in guiding market expectations.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Dutch GDP growth accelerated to 0.4% in Q2
- 02Surprising investment growth at 0.5% supports economic resilience
- 03Exports showed significant recovery led by machinery and food sectors
- 04Euro could strengthen against major currencies over the medium term
Market implications
With the current EUR/USD trading around 1.075, watch for significant levels at 1.04 and 1.12 in alignment with the discussed economic indicators. Additionally, any movement from the ECB addressing inflation concerns could further influence market positioning around this pair.
Risks to this view
Should inflation prove more persistent than anticipated or economic data from the Eurozone deteriorate, this could lead to a bearish shift for the euro, pushing EUR/USD below the 1.04 support level. External geopolitical tensions could also impact export growth, particularly in sensitive sectors like machinery and food.
Older quick take Quick take Published 09:30 The Netherlands Dutch growth getting more traction, with surprising investment and strong export growth Dutch economic growth accelerated to a solid 0.4% quarter-on-quarter in the second quarter. Public and household consumption, investment and exports all expanded. For the remainder of the year, still-elevated inflation will probably keep GDP growing moderately Dutch economic growth accelerated in the second quarter Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Marcel Klok Senior Economist, Netherlands 0.4% GDP growth rate 2Q26 (QonQ) Better than expected The Dutch economy expanded at a somewhat faster pace in the second quarter than in the first quarter (0.3% QoQ).
Exports went from a small contraction to considerable growth of 1.2% QoQ. Yet, the contribution of net exports (exports minus imports) to economic growth in the second quarter was slightly negative (-0.1 percentage points), as imports rose even more strongly (1.4%). The latter was the case for both merchandise trade and service exports.
Exports of machinery and food, in particular, stepped up. Investment growth was surprisingly positive (0.5%), as early indicators had suggested a contraction. In particular, expenditures on telecom equipment rose, while transport equipment (which may include – especially imported – military purchases) was among the strong performers.
Expenditures on constructed infrastructure rose unexpectedly, while investment in commercial real estate and housing fell. At the same time, investment in machinery, software & databases and R&D contracted a little too. Inventories contracted somewhat, but because the contraction was smaller than in the previous quarter, the contribution to quarterly GDP growth was slightly positive (0.1%-point) in the second quarter.
Consumption by households picked up a bit more pace in the second quarter, coming in at 0.5%QoQ, despite low consumer confidence (that in preceding quarters coincided with a high savings rate) and despite lower spending on restaurants, fashion, home & garden, and recreational activities in June due to the heatwave. Wages continued to outpace inflation and pension incomes improved considerably, allowing for continued growth, including a pickup in car purchases and food consumption. Government consumption maintained its steady upward course and continued to expand, albeit at a slower pace (0.4%), with healthcare, education and public administration & government services reporting more hours worked.
All in all, the results were slightly higher than expected (0.3%) for the second quarter and favourably broad-based. Looking ahead, further wage growth and more public spending and demand for semiconductor machinery will continue to increase demand for Dutch producers. But persistent uncertainty in the Gulf region and still elevated energy prices are likely to keep growth contained, while supply constraints, such as the lack of nitrogen emission space, electricity grid congestion and a tight labour market, continue to hold back investment growth in the near future.
So, there is likely to be more moderate growth ahead. Investment Inflation Import Government spending GDP Export 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.
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