AMSTERDAM (Reuters) - The Dutch economy is set for an unprecedented decline this year, as efforts to contain the coronavirus outbreak brought large parts of the country to a virtual standstill in recent months.
The euro zone’s fifth largest economy is set to shrink by 6.4% this year, before rebounding with growth of 3.3% in 2021, government policy adviser CPB said on Tuesday.
The CPB said its projections were very uncertain, as it is still unclear how the COVID-19 pandemic would evolve and exactly how much damage economic lockdowns caused in the first half of 2020.
A new spike in infections in coming months could lead to another year of recession in 2021, the government’s economic policy adviser said, while unemployment would jump to more than 10%.
In its base scenario, which assumes a slow recovery to start in the second half of 2020, unemployment is already set to increase to 7% by the end of next year, which would be a doubling from its 2019 level.
To stimulate the recovery, the government should consider speeding up investment plans for the energy transition and home building, the CPB said, even though economic support measures are already set to lead to an 8% government deficit this year.
Reporting by Bart Meijer; Editing by Muralikumar Anantharaman and Clarence Fernandez