The Dutch Economy Is Slowing Down and Here Is What It Could Mean for Your Wallet
The Iran war, rising energy prices and US trade tariffs are all hitting the Netherlands at the same time, and economists warn that how long the conflict lasts will determine how badly households feel it.
The Dutch economy was already facing a difficult year before war broke out in the Middle East on February 28. Now, with energy prices surging, trade routes disrupted and US import tariffs squeezing global commerce, economists say the combination of pressures arriving all at once is a serious test for Dutch households and businesses.
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Where things stood before
The Dutch economy ended 2025 in reasonable shape, growing by around 1.7 percent over the year. Wages were rising faster than prices for the first time in years, which meant people's purchasing power was gradually recovering after the energy crisis of 2022 and 2023. The De Nederlandsche Bank had forecast growth of around 1.2 percent for 2026, and inflation was expected to fall from 3.3 percent in 2025 to around 2.6 percent.
That was the outlook before the war. Things have since shifted.
What the Iran war is doing to prices
The most immediate effect of the conflict is on energy costs. The Strait of Hormuz, a narrow stretch of water between Iran and Oman, is one of the most critical shipping lanes in the world. Around 30 percent of the world's seaborne oil trade and 20 percent of its liquefied natural gas trade passes through it, meaning any disruption there has immediate global consequences.
Oil prices briefly surpassed 100 dollars per barrel shortly after the conflict began. At the start of 2026, oil was trading at around 60 dollars. Gas wholesale prices also more than doubled in the same period.
For Dutch households, this flows through in a few ways. Under Rabobank's base scenario, where the conflict is relatively short-lived, the average petrol price rises to around 2.22 euros per litre in spring 2026, around 20 cents higher than before. A new energy contract for an average household rises from 200 euros to between 235 and 250 euros per month.
The first pain hits consumers at the pump and on their energy bill, and then spreads through the wider economy because higher energy prices raise costs across almost every sector, including transport, food production and industry.
What the worst-case scenario looks like
Economists have modelled a range of outcomes depending on how long the war lasts and how much infrastructure is damaged. In the worst scenario Rabobank examined, where critical energy infrastructure in Qatar and Saudi Arabia is destroyed, petrol prices could peak at around 3 euros per litre and a new energy contract could temporarily reach more than 400 euros per month.
In that scenario, inflation in the Netherlands could peak at around 5 percent and economic growth would fall to just 0.6 percent for the year. That is the kind of combination that economists call stagflation, where prices are rising while the economy is barely growing, which is particularly difficult to manage because the normal tools used to fight inflation can make slow growth even worse.
Trump tariffs are adding more pressure
The war is not the only headwind. US President Donald Trump has been imposing new import tariffs on European goods, effectively making products traded between the US and Europe more expensive. The Dutch central bank estimated that Dutch exports could face significantly lower demand in 2026 as a result, with business investment also falling as companies become less confident about the future. Unemployment was projected to rise to 4.5 percent in that scenario.
The Netherlands is particularly exposed to trade disruptions because it is one of Europe's largest trading economies and relies heavily on exports. Rotterdam, the continent's biggest port, acts as a gateway for goods entering and leaving Europe.
Is a recession likely?
A recession means the economy shrinks for two quarters in a row, something the Netherlands has narrowly avoided several times in recent years. Forecasts from the CPB and major banks still show room for modest growth in 2026 as long as the energy price spike is temporary and gas market supplies recover later in the year.
ABN AMRO notes that Europe is better placed than in 2022, when it was 40 percent dependent on Russian gas. That gap has since been filled by liquefied natural gas imports and expanded renewable energy capacity. The concern now is not that the situation is as bad as then, but that it is arriving on top of pressures that were already there.
The real test is time. A short shock is something the Dutch economy can absorb. A prolonged war that keeps energy prices high for months could translate into structurally higher prices, renewed pressure on wages and the risk of a new inflationary spiral.
