Netherlands: Economic growth decelerates in the first quarter of 2026
GDP growth hits an over two-year low in Q1: According to the flash estimate, the Netherlands’ GDP increased 0.1% in seasonally adjusted quarter-on-quarter terms in Q1, in line with the euro area average and following a 0.4% expansion in the previous quarter. Q1’s reading was the weakest since Q3 2023 and marginally undershot market expectations.
On a year-on-year basis, the economy expanded 1.2% in Q1, following a 1.8% expansion in the prior quarter.
Decelerating private and government consumption and falling goods exports cap growth: Compared to the previous quarter’s data, figures in Q1 worsened for private consumption (0.0% in seasonally adjusted quarter-on-quarter terms vs +0.1% in Q4), government consumption (+0.5% vs +0.7% in Q4), exports of goods and services (-0.6% vs +1.0% in Q4) and imports of goods and services (0.0% vs +0.3% in Q4). In contrast, the reading for fixed investment improved in Q1 (+0.7% vs +0.3% in Q4).
The statistical office noted that increased spending on aircraft and machinery assets—likely for military purposes—boosted fixed investment. Meanwhile, consumer spending was flat, shifting away from transport equipment and fuels to clothing and food, likely reflecting the impact of the U.S.-Iran war.
On the external side, exports fell due to fewer shipments of machinery and transport equipment; exports of services, which grew 0.8% in the quarter, could not offset the drag from weaker merchandise trade.
GDP growth to ease this year from last: Our Consensus is for sequential GDP growth to tick up in Q2 before remaining stable through the rest of the year.
The outlook for 2026’s annual growth has remained unchanged over the past month after prior downgrades, despite the U.S.-Iran war dragging on.
This year, the Dutch economy is expected to grow at a weaker pace than last year, as private spending growth should roughly halve, and fixed investment plus exports should decelerate; the Middle East conflict and related disruptions to global energy supply will hit the Netherlands’ open economy. Meanwhile, softer wage growth and higher unemployment should dampen households’ budgets alongside higher energy costs.
Still, accelerating public spending should support the economy, and the government recently announced a EUR 774 million support package for this year to help businesses and consumers face the energy shock from the Iran war.
Panelist insight: EIU analysts commented on how their GDP growth forecast has changed since the start of the U.S.-Iran war:
“We had previously expected a recovery in private consumption and investment to provide more support to growth in 2026, on the back of previous monetary easing and continued disinflation. However, the energy price shock stemming from the war in Iran has reversed [these] trends. Higher energy commodity prices will feed quickly into domestic fuel and electricity costs, and higher transport costs will raise the price of goods and services across the board. This will squeeze private consumption growth, and ongoing uncertainty related to the war as well as US trade policy shifts will continue to dampen investment. We forecast a moderation in real GDP growth this year to 1.1%.”