Netherlands Economic Forecast

Netherlands Economic Outlook

June 2, 2020

The economy contracted at the steepest pace since the global financial crisis in Q1, on the back of the global lockdown and restrictive measures domestically, which weighed severely on domestic and foreign demand. Household consumption fell at the strongest clip on record, while exports shrank at the quickest pace in nearly five years. Turning to the second quarter, the economy is forecast to shrink at an even faster pace, thereby entering a technical recession for the first time in nearly eight years, as the full impact of restrictive measures is felt. Unemployment ticked up in April, likely dragging on private consumption; the manufacturing PMI fell to an over one-decade low in the same month; and business and consumer sentiment remained deeply pessimistic in May. However, the gradual lifting of restrictions since mid-May and the extension of the government’s fiscal support package through September should be providing some respite for the battered economy.

Netherlands Economic Growth

GDP is forecast to contract at the steepest rate this year since World War II due to the Covid-19 fallout. The health crisis is dragging heavily on domestic and foreign economic activity, thus weighing on the trade and manufacturing sectors. Moreover, domestic containment measures will hamper the services sector. However, fiscal stimulus should cushion the fall somewhat. FocusEconomics Consensus Forecasts panelists project the economy to contract 6.2% in 2020, which is down 0.6 percentage points from last month’s forecast, before growing 4.4% in 2021.

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Netherlands Facts

Value Change Date
Bond Yield-0.065.70 %Jan 01
Exchange Rate1.120.65 %Dec 31

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