BUSINESS NEWS FROM THE NETHERLANDS
BUSINESS NEWS FROM THE NETHERLANDS
Two Scenarios for the Dutch Economy: What Happens If the Energy Shock Doesn't Fade?
De Nederlandsche Bank's Spring Projections Model Both an Adverse and a Severe Path for the Netherlands
Two Scenarios for the Dutch Economy: What Happens If the Energy Shock Doesn't Fade?
De Nederlandsche Bank's Spring Projections Model Both an Adverse and a Severe Path for the Netherlands
PUBLISHED July 28, 2026
According to “2026 Spring Projections”, published by De Nederlandsche Bank (DNB) on 12 June 2026, gross domestic product is expected to grow by 0.8 percent in 2026 — markedly lower than in 2025 — with the war in the Middle East cited as having led to a sharp rise in oil prices and disruptions to the energy supply that are putting a brake on economic growth. The bank’s baseline scenario represents its central, most-likely projection, built on an assumption that the current level of disruption persists through much of 2026 before gradually easing, rather than either escalating sharply or resolving quickly.
A Recovery Is Still Expected, Eventually
The bank expects the economy to pick up in the years following 2026, partly as a result of falling energy prices and reduced uncertainty — framing the current slowdown as a temporary disruption rather than the start of a longer-term structural decline, provided the geopolitical situation stabilises as assumed. This framing of the current period as a temporary, rather than structural, setback is consistent with the broader tone adopted by most European central banks throughout 2026, though DNB’s own scenario analysis is notably more explicit than most in laying out what would need to change for that optimistic assumption to prove wrong.
Why DNB Built Two Extra Scenarios
Rather than predicting what will happen, DNB’s adverse and severe scenarios are explicitly designed to show what might happen if oil and gas prices stay high for longer and, in the more extreme case, rise further still — a deliberate hedge against the possibility that the baseline assumption of stabilising energy markets proves too optimistic. Under the adverse scenario, DNB’s modelling suggests growth could stall entirely for an extended period, while the more severe scenario incorporates the possibility of an outright contraction should energy markets deteriorate substantially beyond current levels, giving Dutch policymakers a genuinely useful stress-testing framework for contingency planning purposes.
Inflation and Uncertainty Are Directly Linked
Higher energy prices, uncertainty, and cautious consumers and businesses are holding back growth, according to the bank’s own summary of its Spring Projections — a framing that ties the inflation outlook and the growth outlook together as two symptoms of the same underlying cause rather than separate, independently moving variables. This integrated framing reflects a deliberate methodological choice by DNB’s economists to present the inflation and growth channels of the current shock as a single, coherent narrative rather than two separate forecasting exercises that happen to share a common root cause.
Inflation and Uncertainty Are Directly Linked
Higher energy prices, uncertainty, and cautious consumers and businesses are holding back growth, according to the bank’s own summary of its Spring Projections — a framing that ties the inflation outlook and the growth outlook together as two symptoms of the same underlying cause rather than separate, independently moving variables. This integrated framing reflects a deliberate methodological choice by DNB’s economists to present the inflation and growth channels of the current shock as a single, coherent narrative rather than two separate forecasting exercises that happen to share a common root cause.
The Moderate Impact — For Now
Even under the baseline scenario, DNB notes that the impact on inflation remains moderate for the time being — a qualifier that leaves room for the picture to change materially if the Middle East situation escalates beyond current assumptions. The phrase “for the time being” is doing considerable work in this formulation, according to economists who have reviewed the bank’s full technical documentation, since it signals that DNB itself regards the current moderate inflation outcome as contingent on conditions that could shift relatively quickly given the underlying volatility of the situation being modelled.
Five Key Figures, One Underlying Story
DNB’s accompanying analysis, “The five key figures on the Dutch economy,” highlights that inflation and economic growth are linked to energy price movements — reinforcing the scenario-based approach as the clearest way to communicate just how contingent the entire 2026 outlook is on a single external variable. This companion publication, aimed at a broader public audience beyond specialist economists, distils the bank’s more technical scenario modelling into an accessible format intended to help ordinary Dutch households and small businesses understand the key drivers behind the year’s economic uncertainty.
Outlook: Planning for More Than One Future
DNB’s decision to model adverse and severe scenarios alongside its baseline forecast reflects an unusual degree of institutional humility about forecasting in 2026’s environment. The baseline path — 0.8 percent growth, moderate inflation, a gradual recovery from 2027 — remains the central bank’s genuine expectation. But by explicitly laying out what a longer or deeper energy shock would mean, DNB is effectively asking Dutch businesses and policymakers to prepare for more than one version of the year ahead, an approach several other European forecasting institutions have since begun to adopt in their own subsequent publications during the same period.
The Moderate Impact — For Now
Even under the baseline scenario, DNB notes that the impact on inflation remains moderate for the time being — a qualifier that leaves room for the picture to change materially if the Middle East situation escalates beyond current assumptions. The phrase “for the time being” is doing considerable work in this formulation, according to economists who have reviewed the bank’s full technical documentation, since it signals that DNB itself regards the current moderate inflation outcome as contingent on conditions that could shift relatively quickly given the underlying volatility of the situation being modelled.
Five Key Figures, One Underlying Story
DNB’s accompanying analysis, “The five key figures on the Dutch economy,” highlights that inflation and economic growth are linked to energy price movements — reinforcing the scenario-based approach as the clearest way to communicate just how contingent the entire 2026 outlook is on a single external variable. This companion publication, aimed at a broader public audience beyond specialist economists, distils the bank’s more technical scenario modelling into an accessible format intended to help ordinary Dutch households and small businesses understand the key drivers behind the year’s economic uncertainty.
Outlook: Planning for More Than One Future
DNB’s decision to model adverse and severe scenarios alongside its baseline forecast reflects an unusual degree of institutional humility about forecasting in 2026’s environment. The baseline path — 0.8 percent growth, moderate inflation, a gradual recovery from 2027 — remains the central bank’s genuine expectation. But by explicitly laying out what a longer or deeper energy shock would mean, DNB is effectively asking Dutch businesses and policymakers to prepare for more than one version of the year ahead, an approach several other European forecasting institutions have since begun to adopt in their own subsequent publications during the same period.
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