EUROPEAN ECONOMY INSTITUTIONAL PAPER PUBLISHED BY THE EUROPEAN COMMISSION ON MAY 2020.

07/05/2020

 

European Commission has published an European Economy institutional paper in May 2020 about the impact of Covid-19 pandemic on the European economic situation and the European economic developments.

A summary of this institutional paper concerning the Netherlands will be provided below.

• The Netherlands has after growth of 1.8% in 2019, the Dutch economy is projected to contract by about 6¾% in 2020. For 2021, growth is expected to rebound, reflecting a gradual normalisation of economic activity and a recovery of domestic demand and global trade from a depressed level.
• Private consumption expenditure is expected to contract this year by around 9½% with household spending constrained by the containment measures. The recovery of private consumption is likely to accelerate only towards the end of the year.
• The negative contribution of exports to growth is projected to be limited by a similarly sharp drop in imports. In line with the projected global recovery, exports should see positive growth again in 2021.
• The unemployment rate is forecast to rise to around 6% this year, after having reached an historic low of 2.9% in the months leading up to the crisis. In 2021, the unemployment rate is projected to decline gradually to around 5¼% as economic activity recovers.
• Consumer prices are set to moderate to 0.8% this year, after having risen by 2.7% in 2019. As base effects fade away, headline inflation is expected to pick up to 1.3% in 2021.
• The general government budget surplus, which stood at 1.7% of GDP in 2019, is projected to evaporate this year as emergency measures are implemented and automatic stabilisers function fully. The general government balance is forecast to reach a deficit of about 6¼% of GDP in 2020 and around 3½% in 2021.
• In 2021 revenues are expected to increase again, leading to a gradual improvement in the deficit. Government debt is forecast to rise to around 62% of GDP and to decline again in 2021 to 58%.

 

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