Netherlands economy expected to grow 1.4% this year, 1.2% next year, IMF says

The Netherlands is benefiting from the fact that the global economy is performing slightly better than previously expected, according to the International Monetary Fund (IMF). On Tuesday, the IMF slightly increased its projections for both the Dutch economy and the world overall, as the impact of the trade war has been relatively limited so far.

The forecasts remain subject to considerable uncertainty. Tariffs that were only threatened and not actually imposed have not been included in the calculations.

The IMF predicts that the Dutch economy will expand by 1.4 percent this year, up from the 1.2 percent forecast in July. Growth for next year is expected to remain at 1.2 percent.

The outlook has also brightened for other countries, such as the U.S., Germany, and Spain. Worldwide, the fund projects global growth of 3.2 percent in 2025 and 3.1 percent in 2026, slightly higher than the 3 percent and 3.1 percent it forecasted in July.

IMF chief economist Pierre-Olivier Gourinchas explained the reasons behind the upward revisions. The United States concluded trade agreements with various countries and granted several exemptions. Most nations avoided retaliatory actions and maintained a largely open trade system. Additionally, the private sector adapted by advancing imports and swiftly reorganizing supply chains.”

China is responding to higher tariffs by redirecting exports, for example, to Europe. Higher government spending in Germany is supporting growth in the eurozone, while developing countries are gaining from the weaker dollar, according to the IMF economist. Global stock markets have also surged, driven by investor excitement over advancements in AI.

Gourinchas cautions that it would be “premature and incorrect” to assume the trade war has had no significant economic consequences. “Up to now, the impact of tariffs appears to have largely affected U.S. importers, while import prices (excluding tariffs) remain mostly stable and retail price increases are limited.”

However, he notes this could change. If additional tariffs are imposed, the situation could shift, and together with potential supply chain disruptions, global growth next year could fall several tenths of a percentage point below the current baseline projection.

Gourinchas warned on Tuesday that the current wave of investment in artificial intelligence (AI) is making some economists think of the internet bubble of the late 1990s.

Tech company stock prices have soared recently, fueled in part by expectations of future profits. He noted that while this reflects investor optimism for significant returns, a failure to meet those profit expectations could result in steep drops in company valuations.

The parallel with the internet bubble is notable. During the late 1990s, internet company shares soared, only to crash after 2000 when many firms failed to deliver the expected profits. It remains uncertain whether AI-related companies will face a similar correction. “Our role is to highlight risks. This is one such risk,” Gourinchas stressed.

The economist warns that the current surge in AI investments could have wider economic repercussions. Profitable investors may boost their spending, which would drive overall consumption higher. This increase could raise the real neutral interest rate and compel central banks to adopt tighter monetary policies, echoing the conditions seen in the late 1990s.

Conversely, a correction similar to the dot-com crash of 2000–2001 could significantly affect households. A drop in wealth from a stock market collapse could reduce consumer spending and lead to a wider economic slowdown. This scenario highlights how speculative investment surges in a single sector can pose both economic opportunities and risks.