Consumer spending and government investments drive Dutch economic growth
Dutch consumers are expected to increase spending over the next two years, contributing significantly to the country’s economic growth, according to economists at Rabobank. Combined with rising government expenditures, this growth is projected to support broader economic activity, despite challenges in exports and business investments.
Rabobank forecasts that the Dutch economy will grow by 1.7 percent in 2025 and 1.3 percent in 2026. Economists attribute this to an anticipated rise in consumer spending, which accounts for over 40 percent of the economy, and increased government investments in healthcare, defense, and green energy transitions.
“Higher wages are expected to outpace inflation, boosting consumer purchasing power,” said Rabobank economist Nic Vrieselaar. “This will have a considerable effect on broader prosperity.”
Consumer spending is forecast to rise by 2.2 percent in 2025 and 2.1 percent in 2026 compared to 2024 levels. This growth is fueled by an expected collective wage increase of 5.9 percent in 2025 and 4.8 percent in 2026, alongside inflation rates projected at 3.0 percent and 2.9 percent, respectively.
Rabobank noted that this recovery follows a period during which wage increases lagged behind inflation, eroding purchasing power. Consumer confidence in personal finances has also improved, further driving expenditures.
Government spending, accounting for roughly 28 percent of the economy, is set to grow substantially. Expenditures on public services, including healthcare and defense, are projected to rise by 1.6 percent in 2025 and 1.7 percent in 2026. Government investments in infrastructure and defense are also expected to increase significantly, with predicted growth rates of 5.3 percent in 2025 and 8.1 percent in 2026.
These investments include expanding healthcare services to address an aging population and funding previously delayed infrastructure projects.
Business investments are expected to decline temporarily in 2025, primarily due to the expiration of a favorable tax exemption for fuel-powered commercial vehicles. This is expected to cause a sharp drop in van sales, reducing business investments by 2.4 percent that year.
However, Rabobank anticipates a rebound in investments starting in mid-2025, driven by slightly lower interest rates and improved business confidence. Investments in machinery and software are expected to rise as companies address labor shortages.
Dutch exports, which have grown faster than imports in recent years, are expected to slow. In 2025, exports are projected to grow by 2.9 percent, while import growth is forecast at 3.2 percent. In 2026, export growth is expected to decelerate further to 1.9 percent.
Global trade tensions, particularly with China, and anticipated tariffs imposed by the United States under President Donald Trump’s administration, are likely to hinder Dutch exports.
Despite projected economic growth, Rabobank foresees a slight increase in unemployment, from an average of 3.7 percent in 2024 to 4.0 percent in 2026, due to rising bankruptcies. Additionally, workers are expected to work longer hours, which could impact work-life balance negatively.
However, improvements in real disposable income, educational attainment, and life expectancy are expected to contribute positively to broader economic well-being.
