In forecasts published on Tuesday, the CPB said its pessimistic outlook is a result of shrinking world trade and because consumers are spending less and saving more. The CPB is the main economical data supplier to the government.
The Dutch economic contraction for 2009 is estimated at 4.75 percent and next year's unemployment is predicted at 9.5 percent of the labour force - 730,000 are expected to be out of work in 2010. In March, the policy bureau predicted a contraction of 3.5 percent this year and unemployment of almost 9 percent in 2010.
The budget deficit estimate is the highest since the CPB started collecting data in 1970. Director Coen Teulings said on Tuesday that the bigger shortfall is no reason for the government to change its anti-crisis measures. "The important thing is that in the long run, beyond 2011, government finances improve again," Teulings said.
Finance minister Wouter Bos, in a reaction on Tuesday, called the numbers "alarming" but also said the government does not intend to change its policies every time new figures are released.
The national debt will grow to 66 percent of GDP next year. Both that and the deficit will exceed the limits set by the eurozone countries.
The open Dutch economy has been hit hard by the plunge of international trade - estimated at 15 percent next year. Dutch exports are expected to be down 17.25 percent in 2009, with imports down 14 percent. But the steepest fall took place in December, January and February, according to Teulings. "We are counting on a relatively limited contraction in the rest of the year."
The CPB sees light at the end of the tunnel. The stock exchanges have stabilised and American financial markets are recovering faster than the European ones - something Teulings says could be a consequence of the fragmented supervisory institutions in Europa.
Despite the recession, purchasing power is still up in the Netherlands, 1.75 percent to be precise. Next year, however, the CPB expects it to be down 0.5 percent, mostly because of higher social security contributions.
Teulings is less pessimistic than the Dutch central bank, which last week said the economy would contract by 5.4 percent this year. He expects world trade to pick up sooner and faster. The CPB also paints an optimistic picture when it comes to consumer spending.
