The latest estimates from the Netherlands' Bureau for Economic Policy Analysis (CPB) show the Dutch economy is set to shrink in 2009 by at least 0.75 percent.
Despite the statement - often repeated in recent days by the Dutch government in The Hague - to the effect that the country is 'in a relatively good position', a recession is on its way nonetheless.
That 0.75 percent scenario is, in fact, an optimistic one, for the CPB also has an alternative scenario which sets out a possible decline of two whole percent. The head of the CPB, Coen Teulings, emphasises that it is extremely difficult to produce a very accurate forecast in the current circumstances, but the general conclusion is, all the same, crystal clear: The Netherlands is heading towards heavy economic weather.
That may be so, but still - as Labour Party leader, Deputy Prime Minister and Minister of Finance Wouter Bos is quick to point out - there's "no reason whatsoever for panic." Mr Bos, indeed, prefers to make comparisons with more recent history:
"I think that many people associate it with images of the thirties, in the last century: economies in collapse, increasing levels of unemployment hitting record highs. But it's really not that bad. This [crisis] shows greater similarities with the type of downturn the Netherlands went through in 2002 and 2003, and we managed to come out on top again then too. We are still a rich nation, we are still a well-off country."
However, Wouter Bos does have concerns about the predicted rise in unemployment: probably 600,000 people in the Netherlands without jobs in 2010, a rise of some 200,000 compared with earlier estimates.
Uncharted territory
The negative developments have picked up speed in the last three months, since 15 September, the day when US business bank Lehmann Brothers collapsed. Mr Teulings of the CPB says this was the real turning point; when we moved from a 'normal' crisis to where we find ourselves now, in uncharted territory:
"We've never ever experienced this before, and I hope we never do again either."
Joining rank
With the Netherlands now also heading for recession, it's 'joining rank' again with its fellow Eurozone countries, those EU members states which now have the Euro as their common currency.
In Italy, for example, recession is anything but a rare phenomenon. In fact, for this Eurozone member it's the fourth recession in just ten years. In the third quarter of this year, the Italian economy shrank by 0.5 percent, but it had already notched up negative figures in the preceding months too.
Prime Minister Silvio Berlusconi may be successful in managing his own business empire, but he's not managing to spare "Italy Limited" from slipping further into economic malaise.
Spain, on the other hand, is faring a little better. Here, third-quarter growth was minus 0.2 percent, but that was the first negative figure in 15 years.
Cautious banks
Germany, Europe and the Eurozone's largest economy, also saw its economy shrink by 0.5 percent in the third quarter of 2008. The main 'victim' is the country's ailing car industry, which is not in receipt - yet - of any government financial support. Chancellor Angela Merkel is trying to get the credit (i.e. loans) rolling once again by means of a package for the banks worth 500 billion euros. Her attempts have proved fruitless thus far.
European banks are still being extremely cautious with all the money that have been given in recent months, and with how they handle the interest rate cuts handed down by the European Central Bank (ECB) which directs such matters for the Eurozone. On Monday, ECB President Jean-Claude Trichet again called on the banks to start lending to each other once again.
France, too, is moving into recession, according to its central statistics office. The jobless rate among the French is set to move above seven percent. Belgium is also following the general European trend, as is non-Eurozone EU member, the United Kingdom.
So, the Netherlands too is to feel the impact of the worldwide recession, says Mr Teulings of the Bureau for Economic Policy Analysis, and mainly because this country relies on trade with others:
"World trade, on which the Netherlands depends, is set to decrease for the first time since 1975. So, all the internationally operating businesses are going to feel that. Companies which supply the government on the domestic market will, to begin with at least, suffer less."
Dutch deficit
The Dutch budget deficit will also increase quickly, and is expected to top more than two percent in 2010. Two percent is the critical limit which the cabinet set itself. If the deficit goes any higher, then cutbacks will have to be made. But, according to Finance Minister Wouter Bos that's "not needed at all"... yet.
15 December 2008
Hans Andringa
Radio Netherlands
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Following in the steps of France, Germany, the United Kingdom, Italy and Spain, the Netherlands has reported that it too will slip into a recession in 2009.
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