The Dutch economy will shrink by 7.5% this year before recovering in 2021, the International Monetary Fund said on Tuesday in what it called ‘very uncertain’ economic forecasts.

The IMF says in its new World Economic Outlook that the Dutch economy will grow again by 3% in 2021, while unemployment, currently 3.4% will almost double to 6.5% by the end of this year.

Coronavirus will lead to the ‘worst economic downturn since the Great Depression, the IMF said, with global growth in 2020 predicted to fall to -3%. ‘This is a downgrade of 6.3 percentage points from January 2020, a major revision over a very short period,’ IMF chief economist Gita Gopinath said.

The IMF’s forecast for the Netherlands is in line with the most pessimistic from Dutch forecasting agencies.

Deep depression

At the end of March, the government’s macro-economic think-tank CPB said the coronavirus crisis could plunge the Dutch economy into deep depression, with GDP declining by up to 7.7%.

The CPB analysed four scenarios for the impact of coronavirus on the economy in 2020 and 2021, based on the duration of restrictions on physical contact and the severity of the economic impact.

All four scenarios result in recession, with GDP declining by between 1.2% and 7.7% in 2020, the CPB said. In three of the four scenarios, the economic downturn will be more severe than in the 2008–2009 crisis, when GDP fell by 3.7%.