PUBLISHED June 28, 2026
Growth Slows Sharply on Geopolitical Shock
According to De Nederlandsche Bank’s (DNB) 2026 Spring Projections, the Dutch economy is set to grow at a significantly slower pace in 2026 due to geopolitical tensions and soaring energy prices. The war in the Middle East has led to a sharp rise in oil prices and disruptions to the energy supply, putting a brake on economic growth. Gross domestic product is expected to grow by 0.8% in 2026, markedly lower than in 2025. The economy is expected to pick up in the years that follow, partly as a result of falling energy prices and reduced uncertainty.
Inflation Runs Hotter Than Previously Expected
Although inflation is falling compared with 2025, at 2.7% this year it remains higher than the previously projected 2.4%. Rising energy prices are a major factor in this development, although their impact is less pronounced than during previous energy crises. This is because the economy is less dependent on oil than it was in the past, and because the current situation — with the economy and labour market cooling off — differs from previous periods of high inflation. From 2027 onwards, inflation will continue to fall gradually, but will remain above 2% throughout the projection horizon.
Public Finances Breach the EU’s 3% Limit
The government is acting as the main driver of economic growth this year, partly due to rising public spending on healthcare and defence. As a result, the budget deficit this year will rise above the European limit of 3% of GDP. In the longer term, public finances will remain under pressure due to rising expenditure and structural challenges — a notable shift for a country that has historically prided itself on fiscal discipline within the eurozone.
Households have become more cautious as higher prices restrict their purchasing power. Due to declining confidence in the economy, households are setting aside a larger proportion of their income. As a result, consumption is stagnating in 2026. In 2027 and 2028, consumption growth is projected to pick up as uncertainty eases and energy prices fall — a pattern that mirrors what’s playing out across much of the eurozone, where the immediate shock is prompting a precautionary savings response rather than an outright pullback in spending.
Households have become more cautious as higher prices restrict their purchasing power. Due to declining confidence in the economy, households are setting aside a larger proportion of their income. As a result, consumption is stagnating in 2026. In 2027 and 2028, consumption growth is projected to pick up as uncertainty eases and energy prices fall — a pattern that mirrors what’s playing out across much of the eurozone, where the immediate shock is prompting a precautionary savings response rather than an outright pullback in spending.
Firms are also reluctant. Higher costs, uncertainty and rising interest rates are holding back investment growth. At the same time, exports of goods and services are growing at a lower rate, partly because global trade growth is slowing down. From 2027 onwards, this situation will gradually improve: both investment and exports will pick up as global trade recovers and economic uncertainty eases, with Dutch growth becoming more broadly based as a result.
Inflation and economic growth are closely linked to energy price movements, and given the unusual uncertainty surrounding the conflict, DNB added two scenarios to its Spring Projections beyond the baseline: an adverse scenario and a severe scenario. Rather than predicting what will happen, these scenarios illustrate what might happen if oil and gas prices stay high for longer, or rise further still — providing policymakers with a sense of the range of outcomes rather than a single fixed forecast, given how sensitive both growth and inflation are to the war’s evolution.
A key theme running through DNB’s assessment is that, despite real and measurable damage, this energy shock is proving less disruptive than the one that followed Russia’s invasion of Ukraine. Reduced dependence on oil, a cooling labour market that limits second-round wage-price effects, and a different starting point in the business cycle are all cited as reasons why the current shock, while real, is unlikely to replicate the scale of disruption seen in 2022 — offering a measure of reassurance even as the immediate numbers for 2026 disappoint relative to where forecasters stood just months earlier.
Firms are also reluctant. Higher costs, uncertainty and rising interest rates are holding back investment growth. At the same time, exports of goods and services are growing at a lower rate, partly because global trade growth is slowing down. From 2027 onwards, this situation will gradually improve: both investment and exports will pick up as global trade recovers and economic uncertainty eases, with Dutch growth becoming more broadly based as a result.
Inflation and economic growth are closely linked to energy price movements, and given the unusual uncertainty surrounding the conflict, DNB added two scenarios to its Spring Projections beyond the baseline: an adverse scenario and a severe scenario. Rather than predicting what will happen, these scenarios illustrate what might happen if oil and gas prices stay high for longer, or rise further still — providing policymakers with a sense of the range of outcomes rather than a single fixed forecast, given how sensitive both growth and inflation are to the war’s evolution.
A key theme running through DNB’s assessment is that, despite real and measurable damage, this energy shock is proving less disruptive than the one that followed Russia’s invasion of Ukraine. Reduced dependence on oil, a cooling labour market that limits second-round wage-price effects, and a different starting point in the business cycle are all cited as reasons why the current shock, while real, is unlikely to replicate the scale of disruption seen in 2022 — offering a measure of reassurance even as the immediate numbers for 2026 disappoint relative to where forecasters stood just months earlier.
