Dutch economy in good shape to emerge from pandemic

The Dutch economic system is stable enough to overcome the consequences of the coronavirus crisis, central planning office CPB said. This is largely due to the financial support packages put forward by the government during the pandemic, but also the healthy position the Dutch economy was in before the pandemic began, CPB concluded.

The Netherlands ran a surplus each year from 2016 through 2019, the last year equating to 1.7 percent or just over 14 billion euros. After the country's gross national debt rose to get through the Great Recession, it began to decline after 2014.

The Dutch government debt has risen dramatically as a result of the aid packages, but not particularly more so than in the other European countries. The risk of a new euro crisis is smaller than in 2012, the CPB said. This is partly due to the European recovery plan of 750 billion euros.

During the pandemic, the Dutch government has done a good job in preventing a surge of bankruptcies with aid packages, according to the CPB. As a result, banks can absorb possible losses in the event of an increase in the number of bankruptcies.

The CPB has also pointed out several potential obstacles and threats. For example, the search for increasing returns on capital markets creates higher risks. This is driven by low interest rates and as a result, a large amount of money has ended up on the stock and bond markets, the organization stated. This was also clear from a report last week by Statistics Netherlands about household disposable income.

In the event of a price correction, the higher risks can result in losses for investors.

The planning bureau also pointed to increasing cybersecurity threats due to the growing digitization of the financial system. In addition, the threat to digital security has increased because people have been working from home more since the outbreak of the Covid-19 pandemic.