Executive Search in Netherlands – 2021 Outlook

Gradual Recovery in 2021

The Dutch economy is forecast to grow by 2.6% in 2021 in the ING base case scenario, reaching 99% of its pre-covid size by the end of next year.  A second GDP dip by the end of 2020 due to a flare-up of Covid-19 and reinstated social distancing measures will weigh on the recovery early into 2021, but fiscal support remains and prospects for virus containment improve

Macrobond, all forecasts ING estimates. *Fiscal projection deviate from official forecasts by the Netherlands Bureau of Economic Policy Analysis (CPB) i.a. due to differing views on the output gap.

Weak start for 2021

It’s assumed that European governments will be more careful with a gradual unwinding of anti-coronavirus measures during the second wave. As a result, we expect subdued growth in the first quarter of 2021, which should accelerate in the second quarter. We should see more testing in the Netherlands, and the start of the vaccination programme will be made available in the first half of the year.

Since achieving broad immunity takes time, 2021 will be a year in which the economic recovery will still be held back. Investment, in particular, is forecast to suffer from the uncertain outlook that hinges so much on the development of the virus.

Merchandise exports are forecast to have fully recovered by then, while consumption is expected to still lag by 1%.  GDP could be 2.6% higher in 2021 than in 2020, reaching 99% of the pre-covid size by the end of the year. The uncertainty remains high, and growth may also be slower.

But for once, risks seem tilted to the upside: vaccination, mass testing and better treatment options may all come together and allow for a surprisingly rapid full opening of the economy.

Partial rebound for hospitality and transportation

Hospitality, transport (notably aviation and public transport) and services (mostly the travel industry and staffing) faced the biggest decline in 2020. These sectors will also show the highest growth in 2021, although they will not fully recover.

For the hospitality sector, we expect growth of 40% in 2021, after a 40% decline in 2020. Higher unemployment will dampen consumer spending in hotels, restaurants and bars, while the return of foreign tourists will be uncertain and dependent on virus developments.

In contrast to other industries, retail expanded in 2020, when mainly DIY-stores and online shops benefitted from the coronavirus crisis. Here we expect only limited growth for 2021. Online shopping increased the demand for parcel delivery. While demand for some services is lower, working from home will continue in 2021.

The demand for temporary workers is expected to pick up again in the course of 2021. Companies will often hire temporary workers first when they start growing again. Industrial production should show a modest recovery of 2% in 2021 since exports will go up and supply chains (from Asia) remain intact in contrast to early 2020

The construction industry is the only sector for which we project a decrease in production in 2021. It is often hit late in the economic cycle due to long project lead times.

Contact the author: Nancy Koleda
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