Dutch economy expected to continue growing in 2026 and 2027, but unemployment will rise

The Dutch economy is projected to have grown by 1.7% in 2025 compared to 2024, followed by 1.3% growth in both 2026 and 2027. The increase in gross domestic product (GDP) will be primarily driven by higher consumer spending, supported by rising purchasing power. Government spending will also play a significant role, given the extra expenditure required by an aging population and expanded defense budgets. Business investment is expected to recover modestly in the coming years. However, political uncertainty in the Netherlands and global trade barriers continue to hold back investment. The trade barriers, together with the stronger euro and increased labor costs, are likely to put pressure on international trade. At the same time, there is a growing global push for strategic autonomy and more robust supply chains that are less vulnerable to shocks. In essence, this trend means less globalization, which could further constrain Dutch trade with foreign markets over the long term.

We expect growth of 1.3% in both 2026 and 2027 to be slightly below the Dutch economy’s estimated potential. Potential growth represents the maximum achievable growth at which inflation remains in check, based on the availability of labor and capital and how efficiently these resources are used (total factor productivity).

Looking at productivity trends, we expect the economy could grow somewhat faster. Not only are wage increases expected to shift labor from low- to high-productivity sectors, but we are also seeing a significant acceleration in investment abroad, which the Netherlands can also benefit from. In addition, extra defense spending and the impetus from residual National Growth Fund resources, should provide further productivity gains (in Dutch).

However, we expect growth to remain slightly lower due to rising global trade barriers and unmet conditions for achieving maximum growth, such as sufficient electricity capacity and nitrogen emission and deposition allowances.

Because the Dutch economy is set to grow below potential, we expect unemployment to rise further in the coming years. Inflation, however, we expect to normalize, declining from a still relatively high average of 3.0% in 2025 to 2.0% in 2027.

As mentioned, we expect unemployment to rise further in the coming years, averaging 4.1% in 2026 and 4.3% in 2027, up from 3.9% this year. In recent months, unemployment has already climbed to 4.0%, after remaining (well) below that level for four consecutive years. This recent increase is not due to job losses, which remain historically low (see figure 3). Instead, unemployment has risen because employment growth is lagging behind the growth of the labor force (employed pople plus job seekers). The likelihood that (re)entrants, such as students and former stay-at-home parents, can transition directly from the non-labor force into the workforce has decreased slightly. Similarly, the share of unemployed individuals finding jobs has also fallen slightly (see figure 3). These trends are reflected in the number of vacancies. While vacancies remain historically high, the number of vacancies per 1,000 employees has been steadily declining for three years, particularly in the private sector (see figure 4).

Household spending, which accounts for more than 40% of total expenditures in the economy, is expected to grow by 1.8% in 2026 and 1.9% in 2027, following an estimated 1.6% this year. Consumers remain the main driver of growth both this year and in the next two years. In recent years, households have steadily recovered real incomes after the energy crisis, and wages are expected to outpace consumer prices in 2026 and 2027. For example, in 2026 we anticipate an average CLA wage increase of 4.9%, compared with inflation of 2.5%. In 2027, we expect wages to rise another 3.3%, while prices increase by 2.0%. Households were already more optimistic about their current financial situation – how much money they have left over – but recently they have also become more positive about their outlook for the next twelve months.

Many businesses front-loaded the purchase of delivery vans last year because the private vehicle and motorcycle (BPM) tax exemption for vans running on diesel, petrol, or gas expired this year. This has led to a sharp drop in sales (in Dutch) in 2025, which will weigh on business investment this year, expected to be 2.3% lower than in 2024. For 2026 and 2027, we expect a recovery, with business investment growing by 1.5% and 1.9%, respectively. Interest rates, while much higher than a few years ago, have remained relatively stable over the past year. In addition, global uncertainty – particularly around US President Trump's (trade) policy – has eased somewhat, providing some support for the investment climate. High energy costs and increased labor costs may also encourage companies to automate and modernize. However, the overloaded energy grid and limited nitrogen emission allowances are likely to constrain faster growth in business investment. On the upside, the new NATO spending norm could boost investment: Increased European defense budgets may spur additional spending by the Dutch defense industry, including in research and development.

After peaking in 2022, housing investment – comprising primarily residential construction and renovation – declined in 2023 and 2024 driven by reduced new construction and a drop in home sales. Housing investments recovered slightly last year, and we estimate a 3.3% increase this year compared to 2024. However, this growth is unlikely to continue over the next two years. We expect very slight growth or stagnation, with 1.0% growth in 2026 and 0.1% in 2027. This slowdown is partly due to an expected decline in home sales, as ownership change often triggers renovations. Persistent bottlenecks in construction – exacerbated by the fall of the Dutch cabinet – are also expected to limit building activity. As a result, we see little room for growth in investment in new constructions over the next two years.

Over the past five years, government spending has grown strongly, averaging 3.3% per year (see figure 7). We expect this upward trend to continue in the coming years, although at a slightly slower pace. For example, government consumption – such as staffing civil servants, teachers, healthcare workers, and military personnel – is projected to increase by 1.7% in 2026 and 1.5% in 2027. One key driver is the growing demand for care, fueled by an aging population. Figure 4 also shows that the vacancy rate in healthcare remains high. In addition, expanding the defense sector will require more soldiers. A larger defense apparatus will also significantly impact public investment. Partly due to defense expansion (in Dutch), government investments are expected to grow by 3.0% in 2026 and 4.5% in 2027. Overall, government spending accounts for more than a quarter of total economic expenditure. Its continued growth will therefore make a substantial contribution to the GDP growth we anticipate over the next two years.

The Netherlands consistently exports more than it imports, maintaining a trade surplus of nearly 10% of GDP. However, imports have grown faster than exports over the past two years, causing the trade surplus to shrink slightly. This trend is expected to continue in the coming years, with the surplus to decline to about 9% of GDP by 2027. We expect imports to grow by 3.0 in 2026 and 3.1% in 2027, as households, businesses, and governments purchase more goods and services from abroad in the coming years. This import growth is offset by a somewhat more modest export growth of 2.1% in 2026 and 2.4% in 2027, partly due to the US import tariffs (in Dutch) and a stronger euro, which make Dutch products more expensive for foreign buyers, especially in the US.

A risk factor for international trade, both positive and negative, is the push for so-called strategic autonomy. The Covid-19 pandemic, the energy crisis, and the geopolitical tensions over rare earth metals and computer chips, for example, have exposed the vulnerability of globally integrated value chains. To improve resilience, European companies and governments are increasingly focused on securing access to essential raw materials, critical components, and semi-finished goods. While this shift could reduce free trade, it may also strengthen the Netherlands' trade ties with European partners.

Economic trends influence the well-being of people in the Netherlands today. This is reflected in the well-being index (in Dutch), developed by RaboResearch in collaboration with Utrecht University. Part of the index includes dimensions that are directly related to our macroeconomic forecasts.

To illustrate this connection, we have projected five key economic variables for 2025, 2026, and 2027 that directly impact one of the well-being dimensions. These variables are: unemployment rate, average hours worked per employed person, real disposable household income, share of the Dutch population with secondary or higher education, and life expectancy. More details on the methodology can be found in this publication (in Dutch).Together, these five indicators account for 38% of the total score on the well-being index. We cannot forecast the remaining 62% – which includes dimensions such as environmental quality, safety, housing, subjective well-being, social involvement, and social contacts.

The development of the five indicators for which we have a forecast is expected to contribute positively to growth of the well-being index by 0.8 percentage points in 2025 (see figure 9). For 2026, we expect the contribution to be 0.5 percentage points, and for 2027 we expect an increase of 0.3 percentage points. The declining contribution of economic variables over time is mainly due to slower growth in real wages in 2026 and 2027. The following section provides a closer look at the contribution of the economic variables.

Real household income is expected to have a positive impact on the growth of overall well-being in the Netherlands in 2025 (see figure 9).[1] This effect will remain positive in 2026 and 2027, although the contribution will be smaller than in the current year. We also anticipate that CLA wages will continue to outpace inflation in 2026 (in Dutch), although the real wage increase will be less pronounced than in the previous year.

The average number of hours worked per person is projected to decrease in 2025 and 2026, followed by a slight increase in 2027. This trend is related to stricter enforcement by the Dutch Tax Administration targeting false self-employment, following the implementation of the Assessment of Employment Relationships (Deregulation Act) (in Dutch) on 1 January 2025. On paper, self-employed individuals typically report more working hours than employees (in Dutch), partly due to time spent on client acquisition, administrative tasks, and meeting the hours requirement for the self-employed tax deduction. As more people transition from self-employment to regular employment, the average number of hours worked per person is decreasing. Although shorter working weeks may negatively impact household income, they can have a positive effect on work-life balance in the broad well-being index.

The share of people with secondary or higher education is expected to rise slightly in the coming years.[2] While education budget cuts pose a long-term risk, the anticipated increase in individuals with at least a basic qualification through 2027 will contribute positively to well-being, partly because a basic qualification improves employment prospects (as highlighted in this CPB study (in Dutch) from 2018).

In addition, Statistics Netherlands (CBS) (in Dutch) expects life expectancy to continue increasing in 2025, 2026, and 2027, which will also have a positive impact on well-being.

[1] We have slightly revised the approach for predicting the income variable compared to our earlier publication on the methodology (in Dutch). We now use real disposable household income as the historical basis and, among other changes, make projections based on household forecasts (in Dutch) rather than population forecasts.

[2] We have slightly revised the approach for predicting the income variable compared to our earlier publication on the methodology (in Dutch). We now use a logarithmic regression line to predict education trends.

Conversely, the expected rise in unemployment will have a modest negative effect on well-being in the coming years. Job loss not only reduces household income but can also harm broader well-being, for example through decreased subjective well-being (see Clark, 2018). The uncertainty associated with financial stress may further lead to health problems (as noted in the 2024 study by the Council for Public Health and Society (in Dutch)).