Dutch economy expected to grow again next year, Covid-19 effects to linger

The Dutch economy will shrink by 5.1 percent this year, but recovery will start at the end of the year and in 2021 the economy will grow by 3.2 percent, according to central planning office CPB's draft-macroeconomic foresight studies. The effects of the Covid-19 crisis will linger, however, with unemployment rising to 7 percent next year.

The CPB expects all parts of the economy to recover somewhat next year. Household consumption will decrease by 5.9 percent this year, and increase by 4.1 percent next year. Investments will go from -7.5 percent this year, to plus 4.4 percent next year. Exports will decrease by 5.2 percent this year, but increase by 4.7 percent next year, and imports will go from -3.7 percent this year to plus 5.4 percent in 2021. Government consumption is the only factor that won't see a decrease this year. It is expected to increase by 2.9 percent this year and by 2.0 percent next year.

CPB director Pieter Hasekamp told NOS that the coronavirus blow to the Dutch economy is "unprecedentedly hard" and "largely yet to be felt". "The corona crisis also has major consequences for things that affect the quality of life: we miss celebrating a wedding or anniversary, the theater and concert stages are empty, and there are serious concerns about loneliness in nursing homes."

Last week Statistics Netherlands reported that in the second quarter the Dutch economy shrank by 8.5 percent compared to the previous quarter and a massive 9.5 percent compared to the second quarter of 2019 - the biggest economic contraction in Dutch history.

These CPB estimates are used by the government to create policy and budgets for the coming year.