Rabobank: Netherlands can hit 1.5% annual growth with €19 billion investment plan

Dutch economists at Rabobank report that the Netherlands could achieve an average annual economic growth of 1.5 percent over the next 25 years, but only with a sustained investment package of 19 billion euros per year, according to a report by RaboResearch. Under current policies, growth is expected to average just 1.1 percent annually.

The package would include 4.7 billion euros annually for education, 5.2 billion for private research and development (R&D), 2.2 billion for public R&D, and 6.7 billion for capital goods such as machinery and infrastructure. Rabobank estimates that each euro invested could generate 2.40 euros in economic wealth.

The bank emphasizes that the higher growth would come primarily from increased labor productivity. Factors expected to drive productivity include a shift toward more productive sectors, labor-saving technologies such as automation and artificial intelligence, and accelerated global R&D investment.

Rabobank cautions, however, that sustained 1.5 percent growth is only achievable if the investments are prioritized politically, economic conditions are favorable, and funding is directed efficiently. Without these conditions, the economic impact would fall short, and growth would likely remain at 1.1 percent.

The report notes that the Dutch economy is structurally changing. High labor participation and an aging population limit workforce growth, making productivity gains crucial. While permanent investment raises the level of economic output, it does not permanently increase the growth rate.

Private sector contributions are expected to form the majority of R&D and capital investment, with government support through subsidies and programs like the National Growth Fund.