Slowly easing inflation outlook supports gradual pickup in Dutch growth
The Dutch economy appears poised for moderate growth, supported by an easing inflation outlook, which is projected to stabilize after a turbulent period attributed to energy market pressures. Per the full note from ING, Dutch GDP growth is anticipated to rebound to 1.3% by 2027 as inflation expectations become more favorable, particularly due to expected declines in energy prices. This outlook, however, remains tempered by lingering uncertainties around indirect effects of past energy price surges, which will continue to influence prices across various sectors. While inflation is set to decrease, it will likely remain above the central bank's target due to persistent increases in service and housing costs, alongside tax hikes that are expected to influence overall price levels well into the coming years.
What the desk is arguing
The desk believes that the gradual improvement in the inflation outlook for the Netherlands signals a solid foundation for economic recovery. The commentary from ING highlights a critical transition where expected GDP growth of 1.3% by 2027 demonstrates resilience in the Dutch economy stemming from improved energy price forecasts and wage growth outpacing inflation.
Supporting this view is the expectation that inflation, while still elevated, is projected to average lower in 2026 at 2.7% compared to 3.0% in 2025, according to ING's analysis. This transition should stimulate household consumption and capital investment, paving the way for sustainable economic growth despite some uncertainty linked to energy price volatility.
Where it sits in our coverage
Currently, our consensus target for EUR/USD is set at 1.075, with a range spanning from 1.04 to 1.12. Specific firm forecasts indicate a target of 1.10 by March 2026 from jpmorgan, while bofa takes a more conservative stance with a lower target of 1.04.
This optimistic growth outlook aligns with the more favorable projections from the aligned firms, positioning our view at the upper end of the consensus spread. The expectation of gradual improvement in economic indicators supports a strengthening EUR against the dollar in the medium term.
How other firms see it
The firms aligned with the positive growth narrative include jpmorgan, which points to improved economic indicators and consumer stability, contrasting with bofa, which remains cautious about underlying inflationary pressures that may undermine expected growth.
Given the context of this analysis, watch for the EUR/USD trajectory to reflect these evolving economic fundamentals, as well as potential shifts in central bank policies that could influence both monetary and fiscal dynamics moving forward.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Dutch GDP growth expected to rebound to 1.3% by 2027
- 02Easing inflation outlook may support household consumption
- 03Inflation projected to moderately decline but remain above 2%
- 04Heightened uncertainty persists due to past energy price volatility
Market implications
Traders should monitor EUR/USD closely, particularly for any shifts around the 1.075 level which could indicate a breakout in response to stronger growth signals. Furthermore, any updates in energy prices or new fiscal policies from the Netherlands could catalyze market movements.
Risks to this view
Reversal of this bullish outlook could occur if energy prices spike unexpectedly due to geopolitical tensions, which would not only reinstate inflationary pressures but could also dampen consumer confidence and spending, ultimately affecting GDP forecasts.
Articles Slowly easing inflation outlook supports gradual pickup in Dutch growth Published 14:15 The Netherlands Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download The Dutch economy is set to grow at a moderate pace, with inflation expectations easing somewhat after previous energy market tensions. While uncertainty clearly remains, the improved inflation outlook is expected to allow for a gradual reacceleration of economic growth in the quarters ahead Marcel Klok We expect Dutch GDP growth to reaccelerate to 1.3% in 2027 Inflation outlook stabilises, but remains uneven Inflation expectations have improved compared with previous months, reflecting somewhat more favourable assumptions for oil and gas prices. This should help contain inflation and support economic growth.
At the same time, the path of inflation remains uneven, with indirect effects from previous energy price increases still feeding through to other prices. And recent events in the Gulf show that uncertainty about energy prices clearly remains. In any case, the indirect effects are expected to push up prices for food and beverages, industrial goods and eventually services, such as hospitality, until the start of 2027.
As a result, HICP inflation is still projected to follow a somewhat wobbly path over the coming year. Nevertheless, it is expected to be lower in 2026 (2.7%) than in 2025 (3.0%) on average and remain below wage growth. High services and housing inflation, together with tax increases such as the VAT on accommodation, continue to keep inflation above the 2% target.
Selling‑price expectations among businesses have declined for the second consecutive month, but remain above historical averages. Household income supports consumption despite caution Despite low consumer confidence and previous inflationary pressures, consumption has grown this year. This resilience is largely explained by wage developments, which continue to outpace inflation, and a still tight labour market, with unemployment remaining low at 3.9% as of June 2026.
However, caution among households remains visible. While some consumers will still face rising energy costs as fixed contracts expire, fuel inflation has already peaked. Consumer confidence has recovered somewhat, but remains low, suggesting that households are likely to keep saving for the time being.
Looking ahead, purchasing power gains are expected to weaken in 2027. Wage growth is projected to decelerate more than inflation, the temporary boost from pension reforms will fade, and labour income tax increases are set to take effect. At the same time, developments in the housing market could pose additional risks to consumption, as weaker housing momentum may dampen wealth effects and housing-related spending.
Uncertainty also remains about how households will adjust their consumption behaviour in response to changes in perceived future pension wealth after the transition to the defined-contribution system. Still, improving economic sentiment could limit precautionary saving, potentially allowing consumption growth to gain further traction again in 2027. Public spending supports growth, with policy uncertainty ahead Public spending remains the main driver of economic growth in 2026, supported by ongoing increases in healthcare and public administration.
This contribution is expected to diminish in 2027, when austerity measures are projected to take effect, particularly in public administration. At the same time, uncertainty around fiscal policy remains elevated. It is not yet clear to what extent the minority government will succeed in implementing its defence‑spending‑focused budget for 2027, nor what compromises may be required to secure parliamentary support.
So far, support for austerity measures – especially in social security – has been limited. Investment outlook improves gradually amid structural constraints Private investment remains subdued in 2026, reflecting geopolitical uncertainty, trade tensions and earlier inflationary pressures, but is expected to gain traction in 2027, supported by a gradually improving macroeconomic environment. Structural constraints continue to weigh on investment decisions, including limited nitrogen emission space, electricity grid congestion and relatively unfavourable energy price competitiveness.
Recent political developments, including increasing support for a comprehensive approach to the nitrogen challenge , could help ease some of these constraints over time. This would support both actual and potential growth, particularly through improved conditions for housing, infrastructure and business expansion. Public investment is set to remain an important pillar of growth, with continued expansion in housing-related infrastructure, the energy grid and defence.
Progress on nitrogen policies could further accelerate these investment plans in the years ahead. External environment remains mixed, but improves International developments continue to play a key role in the highly open Dutch economy. While several manufacturing export sectors still struggled at the start of 2026, expectations have improved in recent months, according to the monthly survey by the European Commission .
Dutch firms in the semiconductor supply chain continue to benefit from strong global investment related to artificial intelligence, and this support is likely to persist into 2027. At the same time, intensifying competition from China – driven by overcapacity and technological upgrading – is expected to constrain export growth in European markets in other manufacturing industries. Nevertheless, export demand is projected to strengthen later in 2026.
Increased defence and infrastructure spending in Europe, particularly in Germany, is expected to generate positive spillovers for Dutch producers and constructors. While the Netherlands' military industrial complex is relatively small, it is competitive in niches such as drones and radar technology. Labour market easing slightly While the labour market is gradually becoming less tight, constraints related to labour shortages remain an important factor for business activity.
At the same time, productivity growth has recovered following the weakness seen during the 2022 energy crisis, suggesting less labour hoarding by firms. Rising wage costs and slowing labour supply growth are coinciding with somewhat weaker employment dynamics, which may push unemployment slightly higher. Even so, the labour market remains relatively tight.
Despite higher wages, average business profitability remains above historical averages, although this likely varies across sectors. Overall, the combination of solid domestic demand and persistent structural headwinds points to a continued environment of moderate, but resilient, economic growth. After a slowdown from solid 1.6% growth in 2025 to a more moderate expansion of 1.2% in 2026, Dutch GDP growth could reaccelerate to 1.3% in 2027 and a more typical 1.5% in 2028.
Investment 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 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 Inflation outlook stabilises, but remains uneven Household income supports consumption despite caution Public spending supports growth, with policy uncertainty ahead Investment outlook improves gradually amid structural constraints External environment remains mixed, but improves Labour market easing slightly
Sources & References
How we cover this story