Geopolitical risks challenge Dutch economy, DNB warns

The Dutch economy showed resilience in 2025, with 1.9% growth, historically low unemployment, and inflation at 3% (trending down before recent Middle East escalations).

Public debt is low at 45% of GDP, and the financial sector is solid.

Despite this, De Nederlandsche Bank (DNB) issues a "code amber" warning, citing persistent domestic issues like a stalled housing market and labor shortages.

Globally, the post-war order is crumbling, with economic integration increasingly weaponized.

Geopolitical events, from the 2020 pandemic and the war in Ukraine to US tariffs and the Middle East conflict, have fundamentally altered the landscape.

This fragmentation increases uncertainty and the risk of shocks.

The Middle East conflict, in particular, disrupts trade and energy supplies, threatening to drive up inflation in the Netherlands and the euro area.

Geopolitical developments pose significant risks to the open Dutch economy, hindering trade and investment.

A lack of international coordination impedes joint approaches to global problems, evident in financial regulation and climate change.

Technological advancements, especially in AI, see Europe lagging the US, while an ageing population threatens economic growth.

To counter these, Europe must enhance resilience and reduce external dependencies in vital areas like defense, energy, technology, and core financial infrastructure.

De Nederlandsche Bank (DNB) emphasizes the critical need for European digital payment solutions, including the digital euro, to reduce reliance on non-European companies.

The financial sector must also maintain adequate buffers and prepare for large-scale cyber attacks.