Amsterdam: The Dutch central bank on Friday announced a reduction in its growth forecast for 2026, attributing the adjustment to rising energy prices associated with tensions in the Middle East. These factors are anticipated to impact both consumers and businesses negatively.

According to Anadolu Agency, the Dutch economy is now projected to grow by 0.8% in 2026, a decrease from the earlier forecast of 1.2%, as stated by De Nederlandsche Bank (DNB). Bas ter Weel, director of monetary affairs at DNB, explained that the increase in energy prices is leading consumers to reduce spending, while companies are dealing with higher production costs, resulting in lower output.

Ter Weel noted that although government spending continues to support growth, the weaker economic performance is expected to diminish state revenues and put additional pressure on public finances. He emphasized the importance of keeping future spending decisions within existing budget limits.

In addition to the growth forecast adjustment, DNB raised its inflation forecast for the current year to 2.7%, up from 2.4%. The central bank highlighted the ongoing uncertainty in energy markets as a significant factor affecting economic outlooks.

DNB also outlined alternative scenarios, considering a potential severe downturn if tensions around critical energy routes persist, as well as a more optimistic scenario where growth could improve in the coming years. Furthermore, the central bank anticipates a slight increase in unemployment.

This downgrade comes amid wider concerns regarding European growth. Just a day earlier, the International Monetary Fund revised its eurozone growth forecast for 2026 from 1.1% to 0.9%.