AMSTERDAM (Reuters) – The Dutch economy in 2020 is expected to shrink at the fastest rate recorded in peacetime as lockdowns have crippled production and exports and are set to send unemployment to the highest level in years, the Dutch central bank said on Monday.
The euro zone’s fifth largest economy would shrink an unprecedented 6.4% this year, even if the gradual easing of measures to contain the coronavirus outbreak continues in the coming months, the DNB said.
Growth is expected to resume at 2.9% and 2.4% respectively in 2021 and 2022, still leaving the economy slightly smaller than before the pandemic erupted.
But any second wave of coronavirus infections and a renewed shutdown of major parts of the economy, either in the Netherlands or abroad, could easily lead to a much bleaker scenario, the DNB said.
“A 6.4% contraction is already twice as much as we saw during the financial crisis,” DNB director Olaf Sleijpen told reporters in a video conference.
“But there is much uncertainty. The depth of the recession and the strength of the comeback depend on developments which are hard to estimate right now. Downside risks prevail.”
In its bleakest scenario, the DNB said the Dutch economy would shrink 11.8% this year and would remain far from its pre-coronavirus levels until at least well into 2023, adding that even this estimate could turn out to be too rosy.
In every scenario unemployment, historically low until recently, is set to rise rapidly throughout this year and next, peaking between 6% and 9% in 2021.
Lockdown measures in the Netherlands have gradually been relaxed in recent weeks, after a mid-March shutdown of all schools, restaurants, bars, museums and other public places.
(Reporting by Bart Meijer; Editing by Alison Williams)