Covid recovery shows solid financial buffers are essential: central bank chief

DNB headquarters in Amsterdam. Photo: Pbech via Wikimedia Commons
Photo: Pbech via Wikimedia Commons

The Dutch central bank expects the economy to grow by more than 2% this year and to pick up again to more than 4% in 2022, bank chairman Klaas Knot said at the presentation of the DNB annual report.

At the same time, however, uncertainty remains high and the crisis has shown that economic developments are difficult to predict, Knot said.

The fact that the Dutch economy performed better than expected – contracting just 3.8% – is partly due to the response of policymakers to the crisis, Knot said.

The government came up with extensive emergency packages, which were supported by European Central Bank monetary policy. In addition, the Dutch economy, he said, was able to show resilience because it was fundamentally healthy when the virus hit, and this is an important lesson for the future.

‘The crisis has taught us that solid financial buffers are essential, and the government must make sure public finances remain in balance and the government debt ratio does not rise further once the pandemic is under control,’ Knot said.


Interviewed later on current affairs show Nieuwsuur, Knot went on to suggest that the government introduce some form of community service for the healthcare system, which would help hospitals and nursing homes deal with future pandemics.

The shortage of staff is the biggest problem and some form of community care service would enable a faster scale up, he said. ‘But it would take a lot of preparation.’

The Netherlands was well placed to deal with the pandemic in every aspect, apart from the healthcare system, he said. ‘Its vulnerabilities have been exposed and it would seem that this is something which must be taken on board in the cabinet coalition talks,’ he said.

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