The Dutch economy is experiencing constrained growth due to trade tariffs and the uncertainty surrounding them, according to the Dutch central bank (DNB). The bank forecasts that the growth of the euro zone’s fifth-largest economy will remain at approximately 1% annually from this year until 2027. This is a downgrade from its earlier projection of 1.5% growth for 2025 and 2026. The DNB’s outlook assumes the current U.S. trade tariffs of around 10% on most foreign goods, with no countermeasures from the European Union. However, the bank highlights significant uncertainty and presents two alternative scenarios. In a severe trade war scenario, where the U.S. enforces suspended tariffs and other nations respond with similar measures, growth could nearly vanish next year, recovering only slightly by 2027. Conversely, if the U.S. and EU agree to eliminate all tariffs later this year, growth could increase by about 0.3 percentage points compared to the baseline forecast. Dutch inflation is expected to fall to 3% this year, down from 3.2% last year, and further decrease to 2.6% in 2026 and 2027. A trade war could reduce Dutch inflation to 2% by 2027 due to declining demand.
— new from Reuters