October 31, 2020

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Economists: “Shrinkage not catastrophic, but substantial and logical”

Economists: "Shrinkage not catastrophic, but substantial and logical"

Despite the negative consequences, there is a glimmer of hope: The Netherlands is doing quite well compared to the countries around us. “That surprises me. Take a look at Germany, where the economy has shrunk by more than 10 percent, while the country is highly praised for its extensive aid packages and companies often have large reserves.”

Generous compensation and trust

Teulings also sees the comprehensive support as an important reason why the numbers are not even worse.

“People who worked in the catering trade, for example, had no income – but that was supplemented by government support. This generous package is probably the reason why the Netherlands outperforms other countries. Our lock was ‘intelligent’, the construction industry . is not imprisoned in the Netherlands and the government has made very generous compensation for the loss of income. “

Consumer behavior is another reason the decline is relatively easy in the Netherlands, says Phlippen. “Households have spent less, but wherever they spend money, they have made it digitally en masse,” says Phlippen.

“The Dutch managed to get through this way. Part of the reason is that trust in the government is quite high: people here don’t easily have the feeling that everything is going at lightning speed and therefore don’t have a big hand on their wallets . “

Back to the old level

With the current contraction numbers, the economy has lost five and a half years of growth. This brings it back to the level of the end of 2014. It is unclear when it will recover. Economists agree that this will be done gradually. “It’s not a short-term problem,” says Klok. “But it’s happening gradually. Although you will see growth in the third quarter.”

Phlippen assumes that the third quarter – which we are currently in – will continue to be negative. “But even with a 5 to 6 percent decline, it’s a solid rebound from the second quarter. If the number of infections continues to rise, it could be disappointing.”

Teulings also expects growth in the next quarter. “It will be higher than normal because sectors that were locked in the first quarter will gradually start working again. That makes sense too: the lockdown was lifted completely in the third quarter. And we come from a low point, then growth above average . But it will be a while before we reach the old level. We are moving forward, but in small steps. “