Coronavirus is shaking up the country in more ways than one. The Netherlands economy will suffer a severe blow due to the impact of the coronavirus in 2020 and 2021. According to CPB, a recession is inevitable. It just depends on how deep a recession will be and how long it will last.
This live coronavirus article has been updated on April 2, 2020.
2 April, 2020 | AtoZ Markets – The coronavirus COVID-19 is affecting 199 countries and territories around the world. The total number of coronavirus cases worldwide to more than 957,500, as the global death toll surged past 48,592. More than 203,414 people worldwide have recovered from COVID-19. At the time of writing, Italy has reported the highest death toll with more than 13,155 deaths.
Coronavirus Situation in the Netherlands
On April 2, the RIVM (National Institute for Public Health and the Environment) reports that another 1,056 people of the Netherlands have tested positive for COVID-19. The new total of infected people is 14,752.
Of the 14,752 people infected, 164 have died today, bringing the number of deaths to 1,339. The dead were aged 55 to 97, the majority of them between 80 and 84 years of age.
North Brabant is the region with the highest number of coronavirus infections, with 2,161 positive tests. South Holland ranks second for the number of positive tests (1042), followed by North-Holland (1029).
Additional measures were announced to stem the spread of the virus in addition to those already in place. It includes the closure of all food establishments, except supermarkets, the closure of schools and all fitness clubs and saunas. It is also no longer possible to go to nursing homes.
The new measures include the ban on all social gatherings until 1 June, the limit of 100 people no longer being valid. A distance of 1.5 meters to be respected, non-compliance may result in a fine. A maximum of three visitors to a house if the distance rule of 1.5 meters can be observed, among other things.
Coronavirus Push the Dutch Economy Into a Sharp Recession
The Netherlands economy will enter its first recession since 2013 this year as the coronavirus epidemic paralyzes production and demand. It drives up unemployment and worsens public finances, the government’s top policy adviser, CPB said on Thursday.
The fifth economy in the eurozone could shrink by 1.2% to reach an unprecedented rate of 7.7% in 2020, according to the CPB. It depends on the duration of the implementation of measures to contain the epidemic of coronavirus.
“All of the scenarios lead to a recession,” said the CPB. It had no way of determining which of its four scenarios was most likely.
In its most positive scenario, the CPB assumes that these measures can be lifted after three months. It would lead to a 1.2% drop in economic production this year, but a 3.5% rebound in 2021.
In its less optimistic scenarios, the measures will only lift after six months, which would cause the Netherlands economy to contract by 5 to 7.7%. It depends on developments in other countries and the financial sector, with a return to growth in 2021.
The darkest scenario, in which the measures are to remain in place for a year, would drop the economy by 7.3% this year. It followed by another contraction of almost 3% in 2021.
Netherlands Bracing for Unemployment
In all scenarios, unemployment, which is currently at a record level of 2.9%, expected to increase considerably. Companies will have to reduce their workforce and limit new hires if the fight against the coronavirus lasts more than three months.
“Corona is a health crisis. Measures to contain the spread of the virus are necessary, but it is clear that they have a profound impact on the economy,” said CPB director Pieter Hasekamp. “At the same time, many things are still uncertain. We do not know how long the current measures will remain in force, nor what their exact impact will be on the economy. Because such measures have never taken before”. This is why the CPB has developed four scenarios.
The Emergency Measures Cause a Sharp Deterioration in Public Finances
The emergency measures that the government is taking to support the economy. These will cause a sharp deterioration in public finances in all scenarios, although the public debt is not yet in the danger zone. In the worst case, public debt will reach 73.6% of GDP by the end of next year. It is still far from the levels considered risky, according to the CPB.
Hasekamp told that the coronavirus and the measures taken to halt its spread would almost certainly lead to a recession in the Dutch economy.
“We continue to calculate, but a recession is almost inevitable,” he said. “Right now, public health is paramount. It would be weird if we didn’t care about the economic consequences now.”
Earlier this month, CPB forecasts indicated that the Netherlands economy would grow 1.4% this year, and the coronavirus quickly brought under control. Otherwise, the previous forecast economic growth of 0.9% or even less.
Rabobank and Klaas Knot, CEO of the Dutch central bank DNB, also said that a recession is likely under current circumstances.
Think we missed something? Let us know in the comment section below.