Dutch manufacturing set for a faster rebound than its eurozone peers
Lead — The Dutch manufacturing sector is poised for a quicker rebound than its eurozone counterparts, particularly driven by rising demands for chipmaking equipment and increased government spending in defense and infrastructure. Per the full note , expected recovery in production is set to commence in 2026 following three years of contraction, which positions the Netherlands favorably in the manufacturing landscape. The data suggests that strong demand in this niche, coupled with a weakening competitive landscape due to geopolitical tensions, underscores a positive outlook that could influence regional currency dynamics. If the recovery materializes, it could strengthen the euro, especially against peers struggling with weaker growth trajectories.
What the desk is arguing
The Dutch manufacturing sector is expected to regain growth momentum faster than other eurozone countries, led primarily by resurgent demand for chipmaking equipment. According to the research, this boost in production can be attributed to increased defense spending and infrastructure investments, alongside a notable recovery in the semiconductor supply chain.
Specifically, the renewed interest in chipmaking equipment is noted as a key driver, which is forecasted to support manufacturing growth as early as 2026. This follows a challenging period marked by high energy prices and reduced consumer confidence amid global geopolitical tensions.
Where it sits in our coverage
Our coverage anticipates a target of 1.075 for the EUR/USD pair, with a range between 1.04 and 1.12. Some firms have distinct views: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
This perspective positions us near the midpoint of the range. jpmorgan's target aligns with the optimistic sentiment reflected in the manufacturing growth outlook, while bofa presents a more cautious view, indicative of the potential economic headwinds still facing broader eurozone markets.
How other firms see it
The general consensus among firms like jpmorgan and others suggests a relatively bullish outlook for the EUR, particularly against weaker currencies that may not benefit from similar domestic growth. Conversely, firms such as bofa reflect a more cautious outlook, capturing a divergence in sentiment based on anticipated economic challenges.
Additionally, the trajectory of the EUR/USD pair will likely be influenced by broader trends in manufacturing across Europe, with an eye on indicators such as German industrial output, which may shift the perception of relative strength within the eurozone economy.
What the calendar says
There are no high-impact events slated in the coming 30 days that could significantly alter the market landscape for the Dutch manufacturing sector or its implications for the euro.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Dutch manufacturing is set to rebound quicker than its eurozone peers, starting in 2026.
- 02Key drivers include rising demand for chipmaking equipment and increased defense spending.
- 03The geopolitical landscape has led to reduced Chinese competition, bolstering local production.
- 04This outlook suggests potential upward pressure on the euro against weaker currencies.
Market implications
Traders should monitor the EUR/USD pair closely as recovery signals in the Dutch manufacturing space could lead to appreciation in the euro, particularly if data confirms the expected growth trajectory. If production sees positive revisions, a target near 1.10 might be more achievable.
Risks to this view
Key risks to this bullish outlook include an unforeseen escalation in geopolitical tensions that may affect energy prices further or a more profound economic slowdown in neighboring eurozone economies. A significant deterioration in consumer confidence could also thwart the expected recovery, reversing currency movements against the euro.
Articles Dutch manufacturing set for a faster rebound than its eurozone peers 14:51 Manufacturing, Construction and Retail The Netherlands Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download After three years of contraction, Dutch manufacturing is expected to see growth again in 2026. Increased demand for chipmaking equipment, as well as support from higher defence and infrastructure spending, should significantly boost production Edse Dantuma The renewed increase in demand for chipmaking equipment is the main driver behind the stronger growth outlook for Dutch manufacturing Manufacturing production to return to growth in 2026 after a disappointing 2025 Differences between manufacturing subsectors remain substantial, but Dutch manufacturing as a whole has proved resilient amid major international turbulence. The renewed increase in demand for chipmaking equipment is the main driver behind the stronger growth outlook.
Higher energy prices caused by the Iran war and the blockade of the Strait of Hormuz have weighed on consumer and producer confidence; as a result, expectations for exports, investments, private consumption, and consequently industrial orders in general, have been somewhat tempered. Stronger demand for chipmaking equipment, temporary inventory build-up and less Chinese competition Nonetheless, the volatile chipmaking equipment market is providing enough counterweight to expect growth. After a period of stagnation and slower growth, chipmakers have gained momentum this year.
The large network of suppliers in the production chain is also seeing market demand pick up. In addition, the Iran war has led to extra inventory build-up and less Chinese competition for the energy-intensive industry. While both effects are temporary, they are providing some additional production growth this year.
Finally, higher defence spending, German infrastructure investment and EU import restrictions, such as the Carbon Border Adjustment Mechanism (CBAM) and higher steel tariffs, are increasingly supporting growth. The Netherlands stands out from other eurozone countries Manufacturing is recovering much more clearly in the Netherlands than in other eurozone countries. Actual production figures have shown a strong increase since December 2025 – something we haven't seen for the eurozone as a whole.
The purchasing managers’ index also shows that Dutch manufacturing is outperforming peers abroad. While the PMI for eurozone manufacturers stood at 51.3 in June, the Dutch manufacturing PMI reached 55.5. That is near the highest level in almost four years and points to continued substantial growth.
Dutch production growth outpaces eurozone Development of manufacturing production level, Jan-22 = 100* *Season- and calendar-day adjusted, two-month moving average Source: Eurostat "> *Season- and calendar-day adjusted, two-month moving average Source: Eurostat The US and China are no longer strong growth markets US import tariffs weighed on manufacturing in 2025 and will continue to do so in 2026. The 50% tariff on steel and aluminium particularly weakens the competitive position of Dutch products in the US market, including semi-finished goods and finished products such as vehicles, vehicle parts and machinery. Chipmaking equipment is less sensitive to tariffs due to its strong competitive position and Asian end markets, although ASML is affected by stricter US export restrictions on China.
The US and China are no longer expanding as end markets for Dutch goods in general. Smaller, chip-related markets such as South Korea and Taiwan are gaining importance instead. US and China are no longer growth markets, South Korea and Taiwan still are Development of Dutch export value of goods for major markets Source: Statistics Netherlands "> Source: Statistics Netherlands Price increases are only modestly weighing on demand Price increases are mainly set to weigh on product demand this year and next year at the start of the value chain.
Energy-intensive basic goods, such as refined petroleum products, polymers, fertilisers and chemical products, have already become significantly more expensive. Supply disruptions from the Middle East allow Dutch producers to pass on higher raw material costs in part, but demand is weaker than during the 2022 energy crisis. As a result, price increases are likely to remain moderate and to feed through only to a limited extent into prices for semi-finished and finished products.
Contracts, forward purchases and hedging of energy and raw material prices also diminish and smooth the pass-through along the chain. If the ceasefire between the US and Iran holds and transport flows to and from the Gulf region continue to recover, the impact is likely to remain temporary and limited. However, a full recovery in oil production and maritime transport could still take months, and the situation remains fragile.
More positive on orders and inventories, but the divide is widening The increase in industrial activity is reflected in stronger order and inventory positions. Even so, expected activity has fallen below its long-term average for the first time since July 2025, likely due to uncertainty around energy prices, geopolitics and the economy. Industrial investment expectations for 2026 have also shifted from growth of more than 5% last autumn to a 3% contraction this spring.
This reflects a widening divide. Parts of the metals, machinery and electrotechnical industry are benefiting from semiconductors, electrification and defence, while trucks, automotive parts and energy-intensive basic industry remain under pressure. It is precisely in that last sector that the largest industrial investments typically take place.
Producers more positive about order-books and stocks Industrial producers' assessment of order-books and stocks of finished products* *Balance of positive-negative judgments; 2-month moving average, stocks assessment inverted, right-hand axis Source: Statistics Netherlands "> *Balance of positive-negative judgments; 2-month moving average, stocks assessment inverted, right-hand axis Source: Statistics Netherlands EU leaders are walking a fine line in tackling cheap imports from China Major European markets such as chemicals, steel, cars and machinery are under pressure from the rapid rise in cheap imports from China. Low labour costs, technological progress, subsidies and an undervalued currency are strengthening China’s competitive position. In 2025, this was compounded by the diversion of Chinese goods originally destined for the US to Europe as a result of high US import tariffs.
This pushed the EU trade deficit with China up to almost €1 billion per day. European leaders are looking for measures to counter unfair competition, such as a mandatory diversification of suppliers of crucial components, but remain divided and fear Chinese countermeasures. Moreover, Europe will remain dependent on China for rare earths and critical components, such as chips, for the time being.
Read the extended version of the report in Dutch here Outlook Netherlands Manufacturing Industry 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 Edse Dantuma Senior Sector Economist, Industry and Healthcare Edse Dantuma is a Senior Sector Economist.
After working for the government for a few years, he joined ING in 2006, where he was a sector banker for two years. Edse studied Economics at Groningen… In this article Manufacturing production to return to growth in 2026 after a disappointing 2025 Stronger demand for chipmaking equipment, temporary inventory build-up and less Chinese competition The Netherlands stands out from other eurozone countries The US and China are no longer strong growth markets Price increases are only modestly weighing on demand More positive on orders and inventories, but the divide is widening EU leaders are walking a fine line in tackling cheap imports from China
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