Dutch economy to shrink 4.3% this year, grow 2.6% in 2021: ING

After shrinking 4.3 percent this year, the Dutch economy will grow again in 2021, by 2.6 percent, economists at ING expect. The Dutch economy should be back to the size of the last quarter last year by mid-2022. In the best case scenario, that will already happen by the end of next year, the bank expects.

"The anticipated recovery is not yet complete, but it is more positive than at the start of the crisis," ING said. Sectors hit hardest by the pandemic, like hospitality, transport and healthcare, will also see the strongest growth. The demand for temporary workers will also increase.

According to ING, the economic contraction this quarter will be less severe than in the first lockdown in the second quarter, which was an unprecedented blow for the economy. The current measures against the coronavirus are less drastic than in the first lockdown. And companies are better prepared and consumers more used to the restrictions.

ING expects that the economy will recover from the second quarter of next years. But bankruptcies, reorganizations, and company closures will also increase, pushing unemployment higher. Households are also seeing their income development deteriorating. "Despite the growth, they will feel the economic consequences of the coronavirus more than in 2020."

The bank stressed that there is still a lot of uncertainty, referring to the expansion of Covid-19 testing, quarantine policy, and the eventual availability of vaccines. This uncertainty will likely mean that investments will remain low for the time being.