Dutch economy: Inflation, growth, deficit, housing, wages

Inflation in the Netherlands is projected to reach 2.7 percent in 2026, a figure higher than anticipated in December, primarily due to elevated energy bills.

This increase, however, will not mirror the sharp spike seen during the 2022 energy crisis, as economic growth is now lower and the labor market is cooling.

For 2027 and 2028, inflation is expected to be 2.3 percent and 2.4 percent, respectively.

Meanwhile, economic growth is set to slow to 0.8 percent in 2026, a full percentage point below 2025 levels.

This deceleration is attributed to global turmoil, geopolitical tensions impacting trade, and reduced export competitiveness due to higher domestic labor and energy costs.

Both firms and consumers are exhibiting caution, leading to postponed investments and reduced consumption.

The Dutch budget deficit is forecast to rise to 3.3 percent of GDP in 2026, surpassing the European limit of 3 percent.

This is largely due to a one-off cost of €8.5 billion for military pension reform, compounded by a deterioration in economic growth projections.

While the deficit is expected to recede to 2.6 percent in 2027 and 2.3 percent in 2028, long-term public finances face further deterioration due to planned expenditures not fully covered by the current coalition agreement.

Public debt will remain below the 60 percent European limit during the current government's term but is projected to rise sharply thereafter.

House prices are expected to increase moderately by 3-4 percent annually in the coming years, a slower pace than in previous periods.

This moderation is driven by higher mortgage rates and lower consumer confidence.