Dutch Central Bank cuts 2026 growth forecast to 0.8 percent and raises inflation outlook to 2.7 percent

The Dutch Central Bank has published its spring forecast, cutting its projection for Dutch gross domestic product growth in 2026 to 0.8% from 1.2% in its December forecast and from 1.8% in 2025. It attributed the weaker outlook largely to the war in the Middle East, which has pushed up inflation in recent months, alongside slower global trade growth and stagnant consumption. Inflation is now forecast at 2.7% for 2026, up from 2.4% in December but still below the 3.0% recorded in 2025. Growth this year is expected to be driven mainly by government spending. Broader geopolitical tensions are expected to slow world trade this year and weigh on Dutch export growth, although strong demand for artificial intelligence-related goods and services provides some support. The central bank expects growth to pick up to 1.2% in 2027 and 1.3% in 2028, with exports and consumption contributing more broadly than in 2026. Its forecast also includes two scenarios in which energy prices remain elevated because the war continues and the Strait of Hormuz stays closed for longer. In the severe scenario, inflation would rise to 4.6% in 2027, although the bank noted that the European Central Bank would in practice be expected to respond with an interest rate increase, which could lower inflation relative to the scenario. The forecast sets out three policy recommendations. It calls for reducing the Netherlands' vulnerability to supply chain disruptions and fossil energy dependence, strengthening business dynamism by removing barriers that keep capital and labor in less productive firms, and pursuing prudent fiscal policy because the government deficit has risen and leaves limited room below the European 3% of GDP ceiling.