Unprecedented 6% decrease in GDP in 2020, amid great uncertainty

Social distancing measures to counter the pandemic, in the Netherlands, have led to an unprecedented decline in economic activity of between 10% and 15%. Because of the considerable uncertainty about the course of the pandemic and the rate of recovery of the economy, the recently published June projections by CPB Netherlands Bureau for Economic Policy Analysis contain various scenarios. Under the baseline scenario, which assumes a moderate recovery, GDP would decrease by 6% in 2020, followed by an increase of 3% next year. Unemployment would double, but, although public finances would be severely impacted, they would not enter the danger zone. CPBâs Director Pieter Hasekamp: âCurrent uncertainty poses major dilemmas for the government. During the recovery phase, a controlled phase-out of government support measures would be desirable, but the extent to which the government can withdraw depends on the pace of economic recovery. Recovery could be accelerated b y an internationally coordinated approach to the crisis, and by moving up investments where possible, such as in housing construction and energy transition.â