Dutch Economy to Grow 0.6 Percent in 2024 after Prolonged Slowdown

The report, entitled The 2025 Macroeconomic Outlook, attributes this slight growth primarily to increased consumer spending, driven by a boost in purchasing power.

Thanks to rising wages and tax cuts, wage growth is now outpacing inflation, leading to an average purchasing power increase of 2.5 percent in 2024 and 1.1 percent in 2025. This marks a recovery from the purchasing power losses caused by previous inflation shocks, the report said.

However, the growth in 2024 remains weak due to the lingering effects of a prolonged slowdown, further exacerbated by strained household disposable income amid high inflation driven by international geopolitical conflicts, it said.

Economic growth is expected to accelerate to 1.6 percent in 2025, signaling a more robust recovery, the report said. However, it warned of a deteriorating fiscal outlook, with budget deficits projected to rise significantly in the coming years, approaching the EU's 3 percent of GDP cap.

This fiscal decline is due to factors such as earlier expansionary policies, an aging population, and rising interest costs. As a result, the government may need to consider spending cuts in response to potential future economic setbacks, the report said.

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