IMF wildly enthusiastic about Dutch economy

The annual review of the Dutch economy this time reads as a great encouragement for the support policy pursued.

The main conclusions of the IMF: the recession in the Netherlands was much less deep than in many countries around us and the economic recovery is strong. This would be due, among other things, to the high degree of digitization that allowed millions of people to continue working from home and the extensive government support.

80 billion euros

In total, more than 80 billion euros in emergency aid has been released for the years 2020 to 2022, according to the Budget Day documents last week. That creates a gigantic hole in the budget, but – according to the IMF – the measures have ensured that the economy has not completely collapsed. Moreover, unemployment has barely increased.

And the treasury could easily bear that blow, because the Dutch government debt was relatively low: around 50 percent of the size of the Dutch economy. This allowed the government, to put it bluntly, to throw money without lenders worrying about excessive debt.

The result: unemployment is almost as low as it was before the pandemic, there are extremely few bankruptcies and banks have never been in trouble.

Crisis almost over

The IMF therefore expects the economy to grow by 3.8 percent this year. In the course of the last quarter of this year, we are thus back at the pre-crisis level. The draft is not expected to come in next year either. Growth of 3.2 percent is forecast for 2022.

That is, by the way, an ounce less than the expectations of our own CPB. They assume growth of 3.5 percent in 2022.

All in all, a great good news show, but that does not mean that the crisis will no longer have any consequences from next year. It is expected that we will not be able to catch up again until 2026.

More money for education

And the IMF also has some critical notes to crack. For example, the institute recommends investing a lot more in education to ensure that employees have the right skills in the future to keep the economy going.

According to the IMF, we have far fewer teachers per pupil in the Netherlands than in other EU countries and expenditure on primary education is even falling. That trend should be reversed.

Towering house debt

Another hot topic: the dry-boiled housing market and its consequences. The Netherlands has traditionally been a country where home acquisition debt is sky-high. Dutch households together have a mortgage debt of 740 billion euros, according to figures from DNB.

That is a potential danger to the economy. Because if the housing market unexpectedly collapses, countless people are suddenly left with a debt that is higher than the value of their house. The result: the housing market comes to a complete standstill, causing it to collapse even further. That in turn can cause people to postpone spending in order to become financially healthy and that is also bad for the economy.


The IMF has some ideas to avert this: further lowering the mortgage interest deduction, for example. The mortgage interest deduction is in a sense an incentive to take on a high debt. The more debt, the greater your tax advantage. This also means that Dutch households can take on more debt than in many other countries.

Another option: pay tax on your home as you do on your assets. In the long run, this should push prices (and therefore debt) down. According to the IMF, this would improve the stability of the economy.

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