August 20, 2021

Projections August 2021

Resilient economic recovery, but uncertainty around corona remains

Press release
In 2021, the economy will grow by almost 4%, followed by over 3% growth in 2022, assuming no new, large-scale social distancing measures will be needed. Following the termination of financial support measures, unemployment will rise only slightly to 3.6% in 2022, which means a continuation of the tight labour market. This is evident from the August Projections just published by CPB Netherlands Bureau for Economic Policy Analysis. These projections are the starting point for the Dutch Cabinet in its decision-making process on the 2022 government budget. On "Prinsjesdag" (the Day of the King’s Speech, 21 September), CPB will publish its Macro Economic Outlook 2022 (MEV). This outlook takes into account all decisions made on the 2022 budget.
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The economic outlook’s main uncertainty concerns the development of the pandemic. In the unfortunate event that large-scale restrictions on economic activity become necessary again, this will directly affect economic development.

Baseline projections: 2020 2021 2022
Resilient recovery after restrictive measures are lifted (GDP growth, %) -3.8 3.8 3.2
Unemployment hardly increases after support measures are terminated (%) 3.8 3.4 3.6
Static purchasing power limited due to lower real wage growth (%) 2.5 0.8 0.0
Government deficit in 2022 much smaller due to termination of support (% GDP) -4.2 -5.3 -1.8
Government debt decreases due to denominator effect (% GDP) 54.3 57.4 56.0

Although the economy as a whole is recovering rapidly, the presence of the coronavirus remains a significant factor. As a result of the uncertainty, the targeted contact restrictions and/or shift in demand, a limited number of sectors are still affected by COVID-19 and perhaps will continue to be, indefinitely. Adjustments in the way of business closures will then be inevitable and desirable, from an economic perspective — particularly, given the tight labour market in sectors that are unaffected by the coronavirus or that are seeing additional demand as a result. The announced termination of generic support measures after the third quarter supports this necessary adjustment.

Government finances are recovering in line with economic development. In 2021, there will still be a budget deficit of 5.3%, which will decrease in 2022 to 1.8% as a result of the termination of support measures and the increase in tax revenues. The rapid GDP growth will cause public debt to decrease again, measured as a percentage of the economy.

Static purchasing power development will decline, because of the wage development’s delayed response to the coronavirus crisis, while inflation rises slightly due to increased raw material prices. In 2021, average purchasing power will still increase by 0.8% as a result of the reduction in the financial burden; without further policy, the average development in 2022 will be 0.0%.

Contacts

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Suzanne van Gils +31 6 21560776 Read more

Table 'Main economic indicators', 2019-2022, August 2021

International items
  2019 2020 2021 2022
Relevant world trade volume goods and services (%) 3.1 -9.3 6.6 6.6
Export price competitors (goods and services, non-commodities, %) 3.9 0.3 3.6 1.5
Crude oil price (dollar per barrel) 64.3 41.8 69.5 69.4
Exchange rate (dollar per euro) 1.12 1.14 1.19 1.18
Long-term interest rate the Netherlands (level in %) -0.1 -0.4 -0.3 -0.3
GDP and demand (volume)
  2019 2020 2021 2022
Gross domestic product (GDP, economic growth, %) 2.0 -3.8 3.8 3.2
Household consumption (%) 0.9 -6.6 2.5 5.7
Government consumption (%) 2.8 1.0 5.8 0.7
Capital formation including changes in stock (%) 7.7 -5.4 1.8 3.3
Exports of goods and services (%) 2.0 -4.8 6.8 5.4
Imports of goods and services (%) 3.2 -5.5 6.5 6.2

Prices, wages and purchasing power
  2019 2020 2021 2022
Price gross domestic product (%) 3.0 2.3 2.3 1.9
Export price goods and services (non-energy, %) 1.0 -0.4 4.2 1.4
Import price goods (%) -1.1 -5.1 8.3 1.2
Inflation, harmonised index of consumer prices (HICP, %) 2.7 1.1 1.9 1.8
Compensation per hour private sector (%) (a) 2.6 7.6 -0.4 1.4
Wages as determined in collective labour agreements, private sector (%) 2.4 2.8 2.0 2.2
Purchasing power, static, median all households (%) 1.1 2.5 0.8 0.0
Labour market
  2019 2020 2021 2022
Labour force (%) 1.6 0.4 0.3 1.2
Active labour force (%) 2.0 0.0 0.8 0.9
Unemployment (in thousands of persons) 314 357 315 340
Unemployed rate (% of the labour force) 3.4 3.8 3.4 3.6
Employment (hours, %) 2.1 -2.7 2.3 1.7
Other items
  2019 2020 2021 2022
Labour share in enterprise income (level in %) 73.9 74.9 73.3 74.4
Labour productivity private sector (per hour, %) 0.0 -1.2 1.5 1.4
Private savings (% of disposable household income) 4.5 11.6 11.4 7.0
Current-account balance (level in % GDP) 9.4 7.0 8.3 9.1
Public sector
  2019 2020 2021 2022
General government financial balance (% GDP) 1.7 -4.2 -5.3 -1.8
Gross debt general government (% GDP) 48.5 54.3 57.4 56.0
Taxes and social security contributions (% GDP) 39.3 39.7 38.8 38.3
Gross government expenditure (% GDP) 42.4 48.4 48.1 43.9

(a) The NOW wage cost subsidy, and the continuity contribution to health care, have an upward effect on the wage mutation in 2020 of 3.3%-points and a downward effect of 1.6%-points in 2021 and 1.5%-points in 2022.

Contacts

Photo of Diederik Dicou
Diederik Dicou +31 6 22827239 Read more
Photo of Bert Smid
Bert Smid +31 6 11594311 Read more
René Schulenberg +31 6 15832993 Read more