Economic growth in the Netherlands will rebound faster from the coronavirus slump than previously expected, as consumers start spending pent up savings and international trade continues to recover, the Dutch central bank (DNB) said on Monday.
The euro zone’s fifth largest economy is set to grow 3% this year and 3.7% in 2022, the DNB said, following a contraction of 3.7% last year due to the pandemic. Growth is expected to slow to 1.9% in 2023.
The central bank, which late last year predicted growth of 2.9% for both 2021 and 2022, said the economy would be back to its pre-coronavirus level at the end of this year.
“The recession is less severe than expected”, DNB director Olaf Sleijpen told reporters.
“Consumers and companies have adapted pretty well to the pandemic, and international trade remained much stronger than expected.”
Growth has resumed in the second quarter, the bank said, following a short recession caused by the coronavirus lockdown due to which bars, restaurants and many stores were closed from October.
The lockdown has been gradually eased in recent weeks, as the roll out of vaccinations significantly lowered the infection rate. Bars and restaurants have reopened and restrictions for non-essential stores have been lifted.
The central bank said the government had successfully helped companies survive the health crisis with lavish support schemes, but should try to phase out support in the coming quarter.
“It’s now time to deal with structural problems, such as the energy transition, the housing market and labour market reforms”, Sleijpen said.
Despite heavy spending on coronavirus support, Dutch government finances leave room for investments, DNB said.
Government debt is expected to peak around 60% of gross domestic product (GDP) next year, while the government’s deficit is set to shrink significantly as the economy recovers.
Photo: Dutch Parliament, The Hague – EC Audiovisual Service