AMSTERDAM - Economic growth in the Netherlands will come to a halt for most of the year as energy prices and overall inflation soar due to Russia's war in Ukraine, the Dutch central bank (DNB) said on Monday.
Growth of the euro zone's fifth largest economy will slow to 2.8% this year and 1.5% in 2023, the DNB said, down from 5% in 2021, and slower than the central bank's previous projection of 3.6% for 2022.
The headline growth predicted for 2022 also paints a rosy picture as it is purely a statistical result of the strong post-COVID recovery at the end of last year, DNB said.
"Growth has come to a halt already and will stay around zero until the last three months of the year," DNB director Olaf Sleijpen told reporters.
Growth is expected to pick up at the end of 2022, but only if energy prices are past their peak by then.
Inflation in that scenario would peak at 8.7% this year and would drop to 3.9% and 2.4% in 2023 and 2024 respectively.
DNB, however, also presented a bleaker scenario in which Russia continues its war in Ukraine until at least the end of 2023 and decides to halt all energy supplies to Europe by next month.
In that case, the Dutch economy would only grow 0.4% this year and would shrink 1.5% in 2023, while inflation would run up to almost 11% this year and 5.5% in 2023.
(Reporting by Bart Meijer, editing by Ed Osmond)