Dutch economy to shrink 3.5% due to Covid-19 measures: ANB Amro

The measures taken to curb the spread of coronavirus Covid-19 will result in the Dutch economy shrinking 3.5 percent this year, ABN Amro calculated on the assumption that the current restrictions will last about two months. Unemployment will be around 4.5 percent by this summer, compared to 2.9 percent in February, according to the bank.

The bank expects all sectors to be affected as consumer spending decreases, but the hospitality sector will be hit the hardest. But the bank also noticed a shift to online shopping that partly substitutes for less physical shopping. All in all, consumer spending is estimated to decrease by 5 percent this year. Production is also affected by people contracting the virus, or ordered to work from home, the bank said in another report released on Friday.

"An open economy such as that of the Netherlands is vulnerable, trade is entering a downward spiral," ABN Amro said, but added that there is hope. If the scenario ABN Amro is working on turns out to be true, and restrictions are lifted in May, there will be some recovery in the second half of this year, the bank expects. "If most restrictions, such as the closure of cafes and restaurants, are lifted in May, economic growth may rebound strongly in the summer," the bank said.

Economic growth is expected to return to a higher level in the course of 2021, the bank said.

On Thursday central planning office CPB also issued forecasts for the Dutch economy, also predicting a recession. The intensity of this depends on how long the coronavirus restrictions remain in place. Where ABN Amro worked on a scenario of two months, the CPB scenarios ranged between three and twelve months.