The Dutch economy will contract by 5.7% this year, despite all the government support, Rabobank economists said on Monday in a new quarterly update.

‘The relatively mild lockdown caused a smaller contraction in the first half of the year than in many other eurozone countries,’ the economists said. Yet, while the government’s aid packages have helped ease the pain, the economists argue, they have been unable to prevent a deep recession.

Now the lockdown has been eased, some sectors will start to recover but an added problem in the second half of the year will be the rise in unemployment and the bleak prospects for exports, the report said.

The economists expect unemployment to have gone up from 3% to 7% by the end of the year, with reorganisations and bankruptcies on the cards for the second half of the year.  And the problems facing the Netherlands’ most important trading partners will see the export of goods and services shrink by 7%.

Nevertheless, the Rabobank economists say not all sectors of the Dutch economy have been hit by the ‘intelligent lockdown’ and the Dutch economy was in good shape before the pandemic started.

They also expect the French, Italian and British economies to shrink by at least 10% this year, and as much as 13% in Spain.

However, they say, the other countries will recover more quickly. The economists put  Dutch economic growth at 2.9% next year, but say it will be as much as 7% to 8% in France, Italy and Spain.

All the estimates about the impact of coronavirus on the Netherlands and the eurozone are still subject to major uncertainties. ‘Both worse and better outcomes are conceivable with new medical, political and social developments,’ the Rabobank report said.

If the Rabobank forecast pans out, this would represent the biggest dip in the Netherlands in 100 years.