Inflation sensitivity to Iran energy shock – ABN AMRO

ABN AMRO economists see the Dutch economy broadly mirroring Eurozone dynamics under Iran conflict scenarios, with transmission mainly via higher inflation rather than deep growth damage. They flag a plausible negative quarter in 2026 in a severe case, but stress resilience, while warning that tighter labour markets and higher starting inflation could make Dutch price pressures more persistent.

Dutch growth resilient, inflation more exposed

“For the Netherlands, the implications broadly mirror those of the eurozone. The impact will depend on how the conflict evolves. Across the central, negative, and positive scenarios, the transmission to the economy is expected to occur more through higher inflation than through a pronounced near‑term growth shock.”

“Preliminary estimates indicate that the negative scenario would lead to a marked slowdown in Dutch GDP growth relative to our current baseline, with a negative quarter in 2026 plausible. A prolonged recession, as we saw with the four consecutive quarters of contraction in 2022–23, is unlikely even in the negative scenario. In the other scenarios the growth shock is more shallow.”

“Inflation, by contrast, could see more significant impact. In both the middle and positive scenarios, Dutch inflation may experience increases, surpassing the 3% again, in line with the eurozone. In the negative scenario, inflation is likely to be somewhat stronger than in the euro area for several reasons.”

“First, the starting point of inflation differs: where eurozone inflation is already below the 2% ECB target, Dutch inflation is still elevated at 2.4% as of February. Second, the timing of the energy shock is unfavourable. With CLA-wage growth still above 4%, the Netherlands is in the long tail of the previous energy shock.”

“That said, the economy enters this uncertainty from a position of resilience. Recent growth momentum has been robust, and key fundamentals, such as household savings and private debt ratios, have improved.”

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)