The Dutch economy has suffered considerably from the corona crisis, but the recovery is faster than expected. In the Macro Economic Outlook 2021, the Central Planning Bureau (CPB) expected a contraction of 5 percent this year. Today the CPB announces that the economy will shrink ‘only’ 4.2 percent in 2020.
The outlook for 2021 is more bleak. If the corona crisis in Europe is under control, the economy will grow by 2.8 percent next year. This is disappointing, because the CPB previously expected a growth of 3.5 percent.
Unemployment will rise to more than 6 percent in 2021. Especially young people, flex workers and self-employed workers will be affected, CPB expects. That seems like a windfall, because in the earlier forecast, the CPB feared unemployment of 8.5 percent.
Strong growth in the summer
The Dutch economy has never grown as fast as in July, August and September of this year, it turned out a few weeks ago from figures from the Central Bureau of Statistics. Yet it was not enough to make up for the blow that the economy took in the preceding months from the corona crisis.
Statistics Netherlands reported a growth of the gross domestic product of 7.7 percent compared to the previous quarter. That was the quarter in which the economy was largely flat due to all the measures to combat the corona virus. GDP contracted by 8.5 percent in the months of April, May and June.
Third wave, no vaccine? More unemployment
The situation remains very uncertain, CPB emphasizes. We have now entered a second wave. New measures are in place to contain the virus, but it is unclear whether they work sufficiently, how long they remain in effect and whether new waves of contamination will follow afterwards.
That is why CPB has calculated a second scenario in addition to the ‘basic estimate’: the start-stop scenario. In that calculation, the CPB assumes that more waves and lockdowns will follow and corona vaccines are inadequate.
In this negative scenario, the economy will contract by 0.6 percent in 2021 and unemployment will increase towards 8 percent.
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