Dutch economy to grow 2.2% this year; Less unemployment than feared

The Dutch economy will grow slightly less than previously expected this year due to the ongoing coronavirus pandemic. But on the plus side, unemployment will rise much less rapidly than was feared, central planning office CPB said in its latest estimate on Tuesday, NOS reports.

For this year, the CPB expects the Dutch economy to grow by 2.2 percent. In its previous estimate in November, the office still expected 2.8 percent growth. Next year, the economy will strengthen further and CPB expects a growth of 3.5 percent. This is dependent on the population being gradually vaccinated, and coronavirus restrictions being relaxed.

In November, the CPB expected that unemployment would peak at 565 thousand Netherlands residents unemployed. Now the CPB expects that unemployment will peak next year with over 400 thousand unemployed. In the course of this year, the unemployment rate will rise to 5 percent and then fall back to about 4.5 percent of the labor force next year. Currently about 340 thousand Netherlands residents are unemployed.

The coronavirus crisis is also pressuring wages. Wage growth is lagging behind, and with it also purchasing power. Collective bargaining wage increases will amount to only 1.5 percent this year and next year. Partly thanks to expected tax cuts, purchasing power will increase by 0.7 percent in 2021. But next year it will decrease by 0.1 percent.

According to the CPB, the Dutch economy is showing resilience. "Despite the lockdown that hit specific sectors hard, the economy as a whole is doing relatively well," CPB director Pieter Hasekamp said. "Recovery is in sight, but once the virus is under control, the economic consequences of the crisis will still have an effect."