The economy will contract slightly less this year than expected on Budget Day. On the other hand, growth will be slightly slower next year. This is evident from the first estimate of the Central Planning Bureau since the outbreak of the second wave of contamination.
In the estimate, the Central Planning Bureau assumes that a vaccine will be available on a large scale by the middle of next year and that the corona pandemic will be under control. If that is not the case and measures remain in force to contain the pandemic, the economy may also contract further next year.
On Budget Day, the Planning Bureau took into account a dark scenario if a second wave would break out and new restrictive measures would be introduced. In that scenario, unemployment would rise to 10 percent of the labor force and the economy would also shrink in 2021.
Despite the second wave, the Central Planning Board has now adjusted the contraction of the economy downwards this year. This amounts to more than 4 percent. The CPB previously assumed that the economy would collapse 5 percent. Next year there will be a recovery, with a growth of 2.8 percent. That is less than previously thought, when the CPB estimated the growth at 3.5 percent.
Unemployment will rise sharply next year, because support measures for companies are being phased out and reorganisations set in motion. According to this estimate, 6.1 percent of the labor force will be unemployed next year. That amounts to over 200,000 more unemployed than this year.
The Central Planning Board is more positive about the government debt. The budget deficit will be 4.6 percent next year, compared to 5.1 percent that was assumed on Budget Day. The budget debt is still rising, but less than expected at the time.