Deepest recession in 100 years facing Dutch economy; better off than other EU countries
Despite the coronavirus support packages, the Dutch economy is facing its deepest dip in a hundred years, according to Rabobank economists in their quarterly report. The economy will shrink by nearly 6 percent this year, they expect, but add that the Netherlands is better off than many other European countries, NOS reports.
The worst shock to the economy is already behind the Netherlands. This happened in the second quarter, when all kinds of sectors were forced to closed. Between March and early June, Rabobank expects the economy shrunk by 8 percent. The catering industry in particular was hit hard. "Restaurants and cafes are allowed to open again, causing the catering industry to pick up somewhat from the deep valley of the second quarter," Ester Barendregt of Rabobank said to NOS. "But for the year as a whole, a contraction of 41 percent remains for this sector."
Other sectors are still awaiting their toughest period. "For example, the biggest blow to industry is likely to come in the third quarter," Barendregt said. "Construction got off to a very strong start this year, but will now also be delayed by the corona crisis and the long-standing nitrogen problems." Like the sector itself, the bank expects shrinkage in construction to continue into 2021.
Unemployment will continue to rise. At the start of this year, 284 thousand Netherlands residents were unemployed, an unemployment rate of 3 percent. Rabobank expects this to rise to 7 percent by the end of this year. In the coming months, more and more self-employed and freelancers will be without work. There will also be more reorganizations and bankruptcies, resulting in employees with permanent contracts losing their jobs.
Companies are also faced with consumers who have less to spend. The outlook for exports deteriorated. And many of the Netherlands' major trading partners were also hit hard by the pandemic. Dutch companies will therefore export 7.2 percent less goods and services this year, Rabobank said.
"The corona crisis is a huge blow to the Dutch economy," Barendregt said to NOS. "Nevertheless, the Dutch expectations this year are still relatively mild if you look at other countries in the eurozone." Due to the Netherlands 'intelligent lockdown', not all sectors had to close and the Dutch economy was in good shape when the pandemic started. Combine that with a high degree of digitization in the Netherlands, and the first coronavirus blows were more easily absorbed by the Netherlands than other EU countries, according to the bank. Rabobank expects that the Dutch economy will grow again next year, by 2.9 percent.
Other countries that implemented stricter policies, like France, Italy, and the United Kingdom, are likely to see their economies shrink by over 10 percent this year, according to the bank. But their economic growth will pick up faster next year, with Rabobank expecting growth figures of 7 to 8 percent in the above three countries. "This is partly a logical consequence of the less deep fall at the beginning of the corona crisis. But it is also because the Netherlands is relatively vulnerable to a drop in demand from abroad."