In its latest report on the state of the Dutch economy, Rabobank has predicted that the Netherlands will see modest economic growth throughout 2024. The bank predicts that in 2025, the Dutch economy will grow even more, by up to 1,3 percent.
After the Dutch economy, like many other countries, struggled through the COVID-19 pandemic, only to be then hit with soaring inflation during the Ukraine war and the European gas and energy crisis, economists have been predicting that things will soon start looking up. However, many in the country were dismayed to find that during the first quarter of 2024, the Dutch economy unexpectedly contracted, rather than grew.
Rabobank’s estimates show that overall economic growth throughout 2024 in the Netherlands will be modest, and perhaps not the surge in prosperity that many were hoping for having come out of the economic doom-and-gloom of the past four years. Overall, the bank predicts a 0,4 percent growth in the Netherlands’ economy throughout 2024, followed by a 1,3 percent rise in 2025.
The report comes at a time when the new Dutch government has laid out their priorities for the coming parliamentary session - one of the key objectives being to improve the Netherlands’ purchasing power.
Adjustments in Dutch taxes, as proposed by the the PVV, VVD, NSC and BBB coalition, could see a small increase in purchasing power across all income groups, and the number of people living in poverty should start to slow down, according to the research by Rabobank.
In bad news for anyone expecting to save their money, the bank predicts that inflation will continue to rise over the coming years. Economists from Rabobank see inflation climbing to 2,2 percent in 2025, and 2,5 percent in 2026. A large part of this is down to the coalition’s plan to increase VAT, and the possibility of US import duties.
According to another report, published by macro-economic think-tank CPB, the greatest risk to the Dutch economy in the coming years is geopolitical tensions. Despite this, the unpredictability of the last four years in economic terms means that businesses have come to terms with having to plan and prepare for the unthinkable.
“In particular, companies have been reducing their debts,” CPB director Pieter Hasekamp said. “The economy remains strong, given the coronavirus pandemic and the energy crisis.”
The analysis by CPB explains that war in Ukraine and the Middle East, and the possibility of a (trade) war between the US and China make the Dutch economy especially vulnerable, given the country’s heavy focus on international trade. Exacerbation of these issues could create inflation, lower economic growth, and a fall in spending power, as well as a damaging loss of investor confidence in the Netherlands overall, the report added.
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