In a staff concluding statement with preliminary findings for the Netherlands' 2026 Article IV consultation, the International Monetary Fund said the Dutch economy is entering 2026 from a position of relative strength but faces weaker growth and higher inflation from spillovers of the war in the Middle East and higher energy prices. Under the baseline, growth is projected to slow to 1.0 percent in 2026 and 1.3 percent in 2027, while headline inflation rises to 2.9 percent in 2026 and remains around 2.5 percent in 2027 and 2028 before returning to target. Staff viewed the government's targeted energy support and broadly neutral fiscal stance as appropriate, but urged action on structural bottlenecks and tighter borrower-based housing measures to reduce financial stability risks. Downside risks were described as significant. In a severe scenario with oil and gas prices a further 40 percent and 100 percent higher on average over 2026 and 2027, growth over those two years could be roughly halved relative to the baseline. Staff backed support focused on vulnerable households, energy-intensive SMEs and housing-related energy investment, while arguing against broad price caps and VAT or fuel tax cuts. It also said longer-term fiscal sustainability depends on implementing health and tax-funded pension reforms as defense, ageing and climate spending rise, and called for tax changes that rely less on labor, faster action on electricity grid and nitrogen bottlenecks, stronger skills and labor mobility policies, better financing for growth-stage firms, and deeper EU-level market integration. On financial stability, staff said risks remain significant even though banks are profitable, liquid and well capitalized, with the countercyclical capital buffer at 2 percent and systemic bank buffers of 0.25 percent to 2 percent considered appropriate. High house valuations and still-elevated household debt were cited as grounds for tighter borrower-based measures, including lowering the maximum loan-to-value ratio to 90 percent, gradually phasing out mortgage-interest deductibility and reducing reliance on interest-only mortgages. Staff will now prepare a report for the IMF Executive Board, subject to management approval.
International Monetary Fund 2026-05-13
International Monetary Fund staff projects Dutch growth slowing to 1.0 percent amid energy shock and calls for tighter mortgage borrowing limits
In its staff concluding statement for the Netherlands’ 2026 Article IV consultation, the International Monetary Fund projects growth of 1.0 percent in 2026 and 1.3 percent in 2027, with headline inflation at 2.9 percent in 2026 and around 2.5 percent in 2027–2028, and warns of downside risks from higher energy prices. It supports targeted energy support and a broadly neutral fiscal stance, but calls for structural reforms, including tighter borrower-based housing measures such as lowering the maximum loan-to-value ratio to 90 percent, phasing out mortgage-interest deductibility and reducing interest-only mortgages, as well as tax, health and pension reforms to safeguard long-term fiscal sustainability.