The economy is shrinking slightly less this year than expected on Princes Day. On the other hand, growth will be slightly less harsh next year. This is evident from the first estimate made by the Central Planbureau since the outbreak of the second wave of infection.
In the estimate, the Central Planning Bureau assumes that a vaccine will be available on a large scale in the middle of next year and that the coronapandemic will be under control. If this is not the case, and measures to curb the pandemic remain in place, the economy can continue to shrink next year.
On Princes Day, the Planning Bureau still took into account a dark scenario if a second wave broke out and new restrictive measures were introduced. In this scenario, unemployment would rise to 10% of the workforce and the economy would also shrink in 2021.
Despite the second wave, the Central Planning Bureau has now adjusted the decline in the economy this year. That comes to more than 4 percent. Previously, the CPB assumed that the economy would collapse by 5%. Next year there will be a recovery, with a growth of 2.8 percent. This is less than previously thought, when the CPB estimated growth at 3.5%.
Unemployment will continue to rise sharply next year, as aid measures to firms are phased out and reorganisations are initiated. 6.1% of the workforce will be unemployed next year according to this estimate. That amounts to over 200,000 more unemployed than this year.
The Central Planning Bureau is more positive about public debt. The budget deficit will be 4.6% next year, compared with 5.1% expected on Princes Day. The budget debt is still up, but less than expected at the time.