Dutch economy expected to shrink 3.5 pct: CPB

17th March 2009, Comments 0 comments

The Dutch economy is expected to see the sharpest shrinkage since 1931, says the Bureau for Economic Policy Analysis.

THE HAGUE – The Dutch economy, already deep in recession, is expected to contract 3.5-percent this year, the sharpest shrinkage since 1931, a policy advisory body said Tuesday.

"The credit crisis not only means that the Dutch economy is in a deep recession at the moment - it can also have damaging effects for the medium term," said a statement by the Bureau for Economic Policy Analysis, CPB.

It predicted a 0.25 percent shrinkage for 2010.

"It is ... not unlikely that production in the Netherlands will remain at lower levels for a long time to come," it added.

In a final estimate of 2009 economic figures, updating a provisional report issued in February, the CPB confirmed that it expected unemployment to rise to 5.5 percent in 2009, up from four percent in 2008, and to 8.75 percent in 2010.

Before the global economic crisis reached its peak, the government itself had projected a 1.25 percent economic growth figure for 2009.

It had also planned for a 1.2 percent budget surplus for 2008 and 0.8 percent for 2010 - a figure the CPB slashed to a deficit of 2.8 percent for 2009 and 5.6 percent for 2010.

In February, Dutch statistics agency CBS said the economy had entered recession in the fourth quarter of 2008, posting its biggest decline since the beginning of the 1980s.

The main cause of the decline, said the CPB, was a drop in trade - a mainstay of the Dutch economy.

"The export of goods is expected to drop by 10.75 percent (in 2009)," it added.

The three parties making up the Dutch coalition government, have been debating an economic rescue plan for days.

"It is uncertain whether the low point of the global financial crisis has already passed and whether the most drastic events are behind us," said the CPB.

"Foreclosures, domino effects, the infection of other parts of the financial sector and new bail-out operations continue to be a real possibility."

AFP / Expatica

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