Dutch economy to recover somewhat from Covid blow next year: OECD
After contracting 4.6 percent this year thanks to the coronavirus pandemic, the Dutch economy will grow by a slight 0.8 percent next year, according to the Organization for Economic Cooperation and Development (OECD). The expectations are somewhat more gloomy than in June, when the economists expected the Dutch economy to grow by 6.6 percent in 2021, after an 8 percent contraction in 2020.
In 2022, the economy will recover more, with almost 3 percent in growth expected, according to the OECD report published on Tuesday.
"Output is projected to improve gradually in 2021 and 2022," the OECD said. Higher consumption will be the driving force behind initial recovery. But as the government's job retention scheme is phased out, unemployment will rise. That, combined with limited wage growth and declining household wealth, will dampen private consumption growth in the next two years.
Business investment will also remain subdued, "reflecting weak demand and lingering uncertainty", the organization said. Looming pension cuts and the upcoming Brexit will also have a negative effect on Dutch economic growth, the OECD warned.