The Dutch central bank said the economy will experience a sharp slowdown in 2026 while inflation remains above the European Central Bank's 2% goal, pointing to the war in the Middle East as a significant factor.
The bank projects growth for the euro zone's fifth-largest economy to fall to 0.8% in 2026, after an expected expansion of 1.8% in 2025. It sees a gradual rebound thereafter, forecasting growth of 1.2% in 2027 and 1.3% in 2028.
Trade and technology
According to the central bank, disrupted trade flows have been weighing on exports. At the same time, persistent demand for products and services linked to artificial intelligence is providing a partial offset. The Netherlands is reported to be capturing benefits from this AI-related demand.
Inflation outlook
Inflation is forecast at 2.7% for 2026, down from 3.0% in 2025 but still exceeding the ECB's 2% target. The central bank attributes the primary upward pressure on consumer prices to rising oil prices, while judging the overall inflationary effect of the war to be less pronounced.
The projections rest on the assumption that energy prices will gradually revert to pre-war levels by mid-2027. The central bank also outlined a severe scenario: if oil prices remain elevated through 2028, growth could slow to about 0.5% this year and next year, with inflation potentially reaching 4.6% next year.
By comparison, the central bank's December outlook had expected 1.2% growth for 2026 alongside 2.4% inflation.
Implications for trade and markets
The bank's assessment highlights the twin impact of trade disruptions and energy price dynamics on both growth and inflation. Export-dependent sectors and markets sensitive to oil costs are likely to feel the effects most acutely, while areas tied to AI-related investment appear to provide some resilience.
Note - The central bank's projections and the severe scenario are presented as described by the bank. Where the bank's outlook is conditional, those assumptions are noted above.