The Dutch economy is expected to shrink by 4.2 percent this year, the Central Planning Bureau (CPB) reports Wednesday. This expectation is slightly more positive than the 5.1 percent contraction that the CPB previously estimated. The forecast for next year has been adjusted slightly downwards. The agency is expecting a growth of 2.8 percent for 2021, where an increase of 3.2 percent was previously expected.
The CPB is now slightly more positive about 2020 than the forecast in August, because the economy recovered more than expected in the third quarter. Between the beginning of July and the end of September, the Dutch economy rebounded by 7.7 percent, after an unprecedented sharp decline of 8.5 percent in the second quarter.
Because of the second corona wave, the CPB is slightly more pessimistic about next year. According to CPB director Pieter Hasekamp, the second corona wave will “not lead to a fundamentally different economic picture” for 2021. “However, certain sectors, such as the hotel and catering industry, the cultural sector and tourism have again been severely affected by new contact restrictions,” says Hasekamp.
The CPB has become somewhat more optimistic in terms of unemployment. For example, the planning bureau expects unemployment to rise to 4.1 percent this year, instead of the previously expected 4.4 percent. The expectation for next year has also been adjusted downwards. This has been reduced from 6.5 percent to 6.1 percent. “Young people, employees with a flexible employment contract and self-employed people are particularly affected”, according to the CPB in an explanation.
The planning bureau also ventured to make a prediction for the years 2022 to 2025. The expectation is that the Dutch economy will grow by 1.5 percent annually during that period. Despite this growth, the economy will still be 4 percent smaller than it would have been without the corona crisis, CPB thinks. Unemployment is expected to be 4.5 percent by 2025.