The International Monetary Fund (IMF) Executive Board has concluded its Article IV consultation with the Kingdom of the Netherlands, focusing on the Dutch economy's current state and future prospects. The consultation was completed on July 16, 2025.
The IMF noted that the Dutch economy is highly developed and integrated into global value chains. Despite this, it faces challenges due to trade tensions and domestic policy uncertainties. These factors have tested its resilience, which has been supported by strong fundamentals. However, constraints in areas such as labor market capacity, housing, emissions space, and electricity grid are evident.
The IMF predicts that domestic demand will continue to drive growth in the Netherlands. Solid household purchasing power will support this growth even as external demand is affected by trade tensions. Inflation is expected to moderate and align with targets by late 2026. Nevertheless, there are significant downside risks from potential escalations in trade conflicts and political impasses.
The Executive Directors acknowledged the resilience of the Dutch economy but highlighted concerns over rising trade tensions and structural constraints. They advised a shift in fiscal policy from stimulating demand to increasing supply through investments in infrastructure, education, research and development (R&D), private investment in housing, and tax reforms.
Furthermore, they emphasized addressing medium-term spending pressures through structural fiscal reforms in pensions, healthcare, and climate initiatives to create more fiscal flexibility.
The financial system's resilience was praised due to substantial buffers; however, continued vigilance was recommended during transitions such as pension fund changes. Monitoring the residential real estate market closely was also suggested to ensure stability.
To enhance productivity and long-term growth potential, Directors encouraged implementing structural reforms complementary to European Union initiatives. This includes labor market reforms aimed at improving educational outcomes and vocational training while integrating migrants better into the workforce.
Finally, attention was drawn to developing strategies for reducing nitrogen depositions and resolving electricity grid congestion issues—both critical bottlenecks for growth according to the IMF's assessment.