The continuing turmoil in Ukraine and the Middle East forms a risk to the Dutch economy, the government’s macro economic think-tank CPB said on Thursday.

If the situation remains the same, the Dutch economy will grow 0.75% over 2014 as a whole, the same figure the CPB forecast in June.

However, if escalation in either area does occur, the Dutch economy will only grow by between 0.25% and 0.5% next year, down from the 1.25% of June’s forecast.

The budget deficit will reach 2.7% this year – 0.2% lower than the June forecast and under the eurozone limit – and fall to 2.1% next year.

Unemployment

The CPB is also forecasting a slight rise in unemployment this year to 620,000, despite figures earlier on Thursday from the central statistics agency CBS showing that job vacancies rose in the second quarter.

In general, the economic development is in line with June forecasts, but the CPB is pessimistic about world trade.

Hopeful

In a reaction to the CPB figures, finance minister Jeroen Dijsselbloem said: ‘This is hopeful but the recovery is still fragile.’

He also said government finances are still not in order and a budget deficit of close to 2% is not the end of the road.

The CPB figures will be used by the government in their calculations for the 2015 budget which will be presented in September.