Dutch economy to shrink record 4.75 pct
Government advisers say Dutch economy will contract, unemployment will rise and budget surplus will become deficit.
The Hague -- The Dutch economy will contract a record 4.75 percent this year, unemployment will rise to 5.5 percent and the budget surplus will become a 4.1 percent deficit, government advisers said on Tuesday.
"Over the year as a whole, 2009 will show a historical output fall," the Bureau for Economic Policy Analysis (CPB), which advises the government, said in a statement.
"Exports in particular will be hit hard this year, because the export market will slump by an unprecedented 15.25 percent in the projection" -- a post-1945 low.
The CPB says it expects unemployment to double next year. The government think-tank predicts that 730,000 Dutch people will be out of work in 2010--55,000 more than it predicted three months ago.
Next year's unemployment level would reach that of the early 1980s. And, as unemployment rises, consumers tighten their belts and household consumption is expected to drop 2.75 percent in 2009.
The bureau forecast a further 0.5 percent drop in the economy for next year, as well as 9.5 percent unemployment and a public deficit of 6.7 percent.
In 2008, the budget showed a public surplus for the third year running for the first time since 1961.
"On the basis of those elements which can be quantified, the public finances will come out 0.5 to 1.5 percentage points of GDP worse than assumed at the start of this term of government," said the statement.
The figures formed part of the ‘Queen's Economic Forecast’, published annually in June as input for the government's budget preparations.
Last week, the central bank said the economy was expected to contract 5.4 percent this year. The previous record low (since records began in 1922) was a drop of 3.6 percent in 1931.
Before the global economic crisis reached its peak, the government itself had projected 1.25 percent economic growth for 2009 and forecast budget surpluses for 2009 and 2010.
The Dutch economy entered recession in the fourth quarter of 2008.
Under EU and eurozone rules, governments are supposed to keep public deficits to no more than 3.0 percent of output, moving into surplus in times of growth. The public budget covers the budgets of central government, social and welfare services and local government.
AFP / Radio Netherlands / Expatica