ABN AMRO increases growth forecast: Dutch economy stronger than expected

The prospects for the Dutch economy are less gloomy than had been assumed in recent months. A new report from ABN AMRO shows that the economy will grow faster in the coming years than previously thought. According to the bank, the Netherlands is benefiting from rising purchasing power, more trade security and the recent interest rate cuts that support lending.

Economic growth is higher than expected

ABN AMRO has adjusted its growth expectations upwards for 2025 and beyond. The bank now expects growth of 1.7 percent in 2025. In previous estimates, this expectation was even lower. The bank also estimates higher growth for 2026 and 2027, at 1.2 and 1.4 percent respectively.

This is striking, because inflation and political uncertainty have been putting pressure on the economy for months. Yet the Dutch economy appears to be more resilient than expected. According to ABN AMRO, the economy will be stronger at the end of 2025 than expected at the beginning of this year. The Netherlands also benefits from the investment plans in Germany, which have a noticeably positive effect on domestic growth.

Trade security increases and purchasing power increases

The higher growth expectations are supported by several factors. Trade tension between the United States and the European Union appears to be easing. New agreements have ensured that import tariffs will rise less sharply than feared. While increases of up to thirty percent were previously expected, the rates are now limited to fifteen percent. This offers Dutch exporters more certainty.

At the same time, purchasing power increases. Higher wages and falling inflation give households more room in their budgets. According to ABN AMRO, consumer confidence still remains low. Nevertheless, the bank expects that Dutch people will gradually use their savings more often for daily expenses.

The European Central Bank’s interest rate cuts also play an important role. Credit is becoming cheaper, giving companies more room to invest. This not only stimulates the housing market but also consumer spending.

Inflation remains a risk to the recovery

Despite the more positive outlook, ABN AMRO warns that inflation will remain high for the time being. In October, Dutch inflation fell from 3.3 to 3.1 percent, according to figures from the Central Bureau of Statistics. According to the HICP method, inflation is even as high as three percent. That is well above the eurozone average, which is around 2.1 percent.

The higher price pressure is mainly due to rising energy, food and services prices. The labor market also remains tight. There are almost as many vacancies as unemployed. That drives up wage growth and keeps inflation high. Unemployment is rising slightly, but this is mainly because more people are actively looking for work.