Dutch economy should grow 1.5% next year, but inflation will remain high, says ABN Amro

The Dutch economy will continue to grow in the next two years although the pace of this will slow slightly. American import duties will slow the growth somewhat in the second half of next year. These predictions were by the economic department of ABN Amro.

Gross domestic product growth will be 0.9 percent this year. In 2025, growth will reach 1.5 percent, after which this will slow down due to the introduction of American import duties.

ABN Amro believes that people in the Netherlands are generally doing well financially. Consumers were frugal during the first half of 2024. Most of the emphasis was placed on saving and reducing debts.

But historically high wage increases will help people profit from an increase in spending power, ABN Amro stated. The savings buffers and additional repayments that households have recently made on their mortgages provide a good starting point for the coming years.

However, the tight labor market could put pressure on the potential growth. The number of job openings is still higher than the number of people looking for work and the tightness in the labor market will continue for the coming years, as the number of people who can still join the workforce is limited.

ABN Amro is expecting inflation in the Netherlands to remain above the 2 percent target set by the European Central Bank, the ECB. The wage increases in the Netherlands are higher than the average in the eurozone which is mainly due to the tight labor market.

The long-term stagnation in the economy of the country’s most important trading partner Germany clouds the prospects somewhat, as do the conflicts in Ukraine and the Middle East. The import duties that were announced by the newly elected president of the United States, Donald Trump, will also have an effect.

Dutch exports will benefit from companies anticipating the tariffs in the first half of 2025. After that, the negative effects will prevail, ABN Amro thinks.

The Netherlands Bureau for Economic Policy Analysis (CPB) is expecting the import duties set by Trump to have a limited impact on the Netherlands. According to the CPB, just 4 to 5 percent of Dutch exports go to the United States. The CPB stated that the levies would reduce Dutch trade by approximately 1 percent.