News Economy
Rapid recovery of Dutch economy expected
The Central Planning Bureau (CPB) expects the Dutch economy to recover quickly. Economists predict growth of nearly 4% for this year. That will weaken somewhat before 2022, but will still remain at more than 3%.
The growth comes mainly from extra spending by households and the import and export of goods and services. Corona still remains an uncertain factor in the predictions. The CPB assumes that no new large-scale contact restrictions are needed. A change to this will have direct significant consequences for the growth forecast.
A small number of sectors will continue to be affected by uncertainty, targeted contact restrictions and shifted market demand for the time being and potentially continuing to do so. In those cases, business termination is inevitable and economically desirable, according to the CPB. The phasing out of the support measures after the third quarter of this year will accelerate this process.
Shortage in the labor market
This will have little effect on unemployment. The labor market continues to be tight. Unemployment will rise slightly: from 3,4% this year to 3,6% in 2022. The CPB estimates the increase in purchasing power at 0,8%. Wage developments are reacting with a delay to the corona crisis, while inflation is still rising due to higher raw material prices.
Inflation for this year stands at 1,9% and that will decrease slightly to 2022% in 1,8. The CPB is keeping the oil price at $69,40 per barrel virtually and the long-term interest rate for the Netherlands at -0,3% in the coming year exactly the same as in 2021. Public finances will continue to recover next year. The budget deficit will still be 2021% in 5,3, but that will fall to 1,8% in the coming year due to the cessation of expenditure on the support packages and rising tax revenues. Economic growth means that the government debt will fall in relative terms with the expected budget deficit.
Jurphaas Lugtenburg
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