Dutch economy to shrink record 5.4 pct in 2009
Declining exports is leading Dutch economy into a deeper recession than expected, with unemployment set to rise to 2.8 percent of the workforce.The Hague – The Dutch economy is expected to contract 5.4 percent this year, the central bank said Thursday – sharper than any recorded decline and nearly five percent more than forecast six months ago.
"The latest estimates... show that gross domestic product will shrink by 5.4 percent in 2009," De Nederlandsche Bank said in a statement, adding that the Dutch economy was undergoing "a deep recession" due to declining exports.
In December, the bank had predicted a contraction of just 0.5 percent for 2009.
Michiel Vergeer, chief economist at Dutch statistics agency CBS, told AFP a decline of 5.4 percent would be the biggest since records began in 1922, the previous record having been a drop of 3.6 percent in 1931.
The central bank also predicted unemployment would climb from 2.8 percent of the workforce to between eight and nine percent in 2011 – about 850,000 individuals.
"Already in 2009, some 160,000 jobs will be lost," said the statement.
"The rise in unemployment puts pressure on disposable income and makes consumers more circumspect in their spending, causing consumption to decline in 2009 and 2010."
Exports, a mainstay of the Dutch economy, were expected to drop 12.7 percent in 2009, while the budget deficit would rise to about seven or eight percent, said the central bank.
In March, the Bureau for Economic Policy Analysis which advises the government, said it expected the economy to contract 3.5 percent this year.
A 4.5 percent decline was reported in the first quarter.
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.
The Dutch economy entered recession in the fourth quarter of 2008.
AFP / Expatica