The Dutch economy will grow by more than 3 percent per year in both 2021 and 2022. That is what the Central Plan Bureau (CPB) predicts in its last Tuesday economic estimate. The recovery is speeding up thanks to the decrease in the number of corona infections and the growing number of people who are vaccinated, the CPB writes. Unemployment is estimated to be 4.1 percent in 2022, which is equal to the average in the three years before the corona crisis.
Also for the longer term the advisory body is optimistic. The gross domestic product (GDP), in other words the sum of all goods and services that the Netherlands produces annually, is estimated to be 1.5 percent lower in 2025 than predicted before the epidemic. But that is a lot better than the 3 percent decline that was previously expected. “The permanent economic damage of the corona pandemic is therefore expected to remain limited,” the CPB writes in the estimate. The recovery could be even stronger if private individuals save less than in 2020 and thus start to consume more again. However, uncertainties remain, such as a new revival of the virus and inflation, the price of the goods and services we buy, remains an “uncertain factor”.
According to the CPB, inflation will rise from 1.1 percent in 2020 to 2 percent in 2021, and will rise by another 1.8 percent in 2022. Since wages do not rise proportionately, because many companies have less cash in cash due to the crisis, this has consequences for people’s purchasing power. The collective labor agreement wage increase is estimated to fall from 2.8 percent in 2021 to 1.7 percent in 2021, and will rise by at least 1.8 percent the following year. If policy remains unchanged, this would mean that purchasing power will fall in both 2021 (0.6 percent) and 2022 (0.3 percent).
In the estimate, the director of the Central Planning Bureau (CPB), Pieter Hasekamp, emphasizes the positive effect of the subsidy schemes that the cabinet has set up for sectors and companies that have been hit by the corona crisis. “The support policy has worked well to dampen the effects on the labor market and production and to prevent major permanent damage. Despite the corona pandemic, the Dutch economy is in relatively good shape.” He does point to long-term challenges, however, and specifically mentions the climate, education, housing and the labor market.