According to the European Commission the Dutch economy shrinks by 6.8 per cent by 2020. That is a historic drop, with the budget deficit set to increase sharply and the unemployment rate also rising sharply, from 2.9 per cent to 5.9 per cent. Whereas we still had a budget surplus in 2019, we will face a budget deficit this year. This is largely caused by the state aid the Dutch government is now offering to the many companies and entrepreneurs facing the economic consequences of the corona crisis.
Recession advanced and intensified
Compared to the rest of the European Union countries - where an average economic contraction of 7.7 per cent is expected - we are doing well, by the way not too bad. Southern European countries are hardest hit, with Spain and Italy possibly even facing a 10 per cent contraction. It is clear that all countries within the EU, but also globally, will be hit hard by the corona crisis. In doing so, we should incidentally remember that there were clear signs of a cyclical downturn even before the outbreak of this pandemic. Global economic growth was stagnating sharply and a recession of mild magnitude in the Netherlands in 2021 was to be expected. Because of the corona crisis, the recession will only be greatly enhanced AND brought forward.
Positive signs for 2021
Judging by the analyses, the dip is short-lived. For 2021, the European Commission forecasts another 5 per cent growth for the Netherlands. Whether these predictions will eventually come true remains to be seen, but there are plenty of good omens. Positive, for instance, is that - in addition to a number of sectors that will be hit hard - there are also industries that are now precisely grow. Most sectors do suffer from the corona crisis but nevertheless 'just keep running'.
Another positive element is that Dutch consumers are spending heavily. Normally we Dutch people start saving when a crisis arrives, but this time we continue to spend money together. Among other things, many houses are being sold, which brings with it a lot of other spending. In addition, people are currently investing a lot in their homes and gardens, more holidays are being booked at home and online spending has risen sharply.
The newly unemployed are mainly flex workers with temporary jobs. The question is whether they will become long-term unemployed or whether - as measures continue to be relaxed - they will become get back to work quickly. The hospitality industry is cautiously starting up again and will soon need more people. There are also plenty of sectors crying out for people, partly because migrant workers remain in their home countries. The currently unemployed could fill this need. Moreover, it would be good if retraining takes place so that specialised positions can also be filled.
Inventive traders
How this will be in a few months is difficult to predict. The only prediction that is certain to come true is that the economy in the Netherlands will be hit hard. But how hard and how well we recover, we won't really know until 2021. As a country, we have a big advantage: we are a inventive people, have commercial spirit and know about problems challenges make. The European Commission already indicates that we are the least affected within the EU. Thanks to good policies of the Dutch government in recent years, we can cushion this blow. Let us hope that the European Commission's prediction is correct and that the Dutch economy returns to 5 per cent growth in 2021.
