ABN AMRO economists have analyzed the potential impact of an Iran-related energy shock on the Dutch economy, noting that the Netherlands is likely to broadly mirror eurozone dynamics in such scenarios, with the primary transmission channel being higher inflation rather than a pronounced near-term growth shock [1]. Preliminary estimates suggest that in a negative scenario, Dutch GDP growth could slow markedly compared to current baseline projections, with a negative quarter in 2026 considered plausible. However, ABN AMRO stresses that a prolonged recession, similar to the four consecutive quarters of contraction experienced in 2022–23, is unlikely even in the negative scenario. In other scenarios, the growth shock is expected to be more shallow [1].
Inflation is expected to be more significantly affected. In both the middle and positive scenarios, Dutch inflation may rise above 3%, aligning with eurozone trends. In the negative scenario, Dutch inflation is likely to be somewhat stronger than in the euro area, due to several factors. These include a higher starting point for inflation—Dutch inflation stood at 2.4% in February, while eurozone inflation is already below the ECB's 2% target—and the timing of the energy shock, which coincides with ongoing CLA-wage growth above 4%, placing the Netherlands in the extended aftermath of the previous energy shock [1].
Despite these risks, ABN AMRO highlights the resilience of the Dutch economy, citing robust recent growth momentum and improved fundamentals such as household savings and private debt ratios [1].
CONCLUSION
ABN AMRO expects the Netherlands to face higher inflation if an Iran energy shock materializes, with GDP growth likely to slow but not enter a prolonged recession. The Dutch economy's resilience and improved fundamentals may help mitigate deeper growth risks, but inflationary pressures could persist due to elevated wage growth and a higher starting inflation point.