Watch: webinar "the impact of COVID-19 on Global and Dutch Economy"
On May 14 and 15, NLinBusiness and the NL Business Hubs organised the webinar 'The impact of COVID-19 on Global and Dutch Economy'. During this webinar, Edo Offerhaus, Managing Director at NLinBusiness, and Joanna Konings, Senior Economist International Trade Issues at ING, provided insights into the impact of the COVID-19 outbreak on the Dutch and global economy.
Read below for a short summary of the webinar. Would you like to watch the entire webinar? Find the webinar recording below.
Dutch Economic Restart Agenda of VNO-NCW and MKB-Nederland
The rapid worldwide spread of COVID-19 took everyone by surprise. Shortly after companies closed, the Netherlands developed the Dutch Economic Restart Agenda to deal with this crisis (view the agenda here). The agenda poses to address five key issues by which companies are affected, including;
- Logistics in the EU: maintaining open borders for transport of goods and people
- Maintaining open markets for international supply chains
- Other issues concerning the EU and its trade policy
- Export credit insurance (ECI) and financing
- RESTART: Post-corona and trade promotion
NLinBusiness has tried to involve Dutch transnational companies in this policy. To this end, two global surveys were conducted that examined the impact of COVID-19. 90% of the 754 respondents fear a negative effect on their turnover due to the coronavirus. An interesting outcome of the survey is that SMEs in particular, indicate facing bigger consequences than corporates. They predict to make twice as much loss compared to corporates, as they depend on a local network, local resources and local financing.
Impact of COVID-19 on the global and Dutch economy
The rest of the world quickly overtook China in COVID-19 infections. The global supply chain was initially affected by the lockdown, as ports and airports were only running at a minimum and most factories were closed. This supply chain shortage shifted when countries such as New Zealand and China slowly reopened their economies, and factories and ports started operating again. The global economy now faces a demand-side problem; people are postponing large purchases because there is a lot of uncertainty in the economy. Demand for cars for instance fell by 86% in China.
The Dutch economy has also been hit by the Corona crisis. A recession is not the correct description of what we are currently witnessing, instead it is an abrupt stop of economic activity in just a few days or weeks. In the Netherlands, COVID-19 hits about 20% of the economy really hard. Especially the firms in the categories leisure, travel/transport and appearance are affected by the crisis. The rescue packages from governments and central banks are essential to ensure that economies are still healthy once they open up again.
The current government measures in place also put great pressure on consumer confidence. As a result that ING saw consumer spending fall by 30%, however this trend seems to be slowly improving. In the long term, ING predicts that interest rates will remain negative, raw material will be volatile, and major investments are put on hold by several entities and consumers due to the economic uncertainty.
Once we try to slowly go back to pre-corona times and start to reopen the global economy, ING predicts two possible scenarios:
1. The basic case
Once the Netherlands and the rest of the Eurozone opens up, people can return to work and some global travel will return. This means that inflation will fall sharply and the economy will recover v-shaped (see graph below). Although economic growth may be poor next year, it will certainly not be as bad as this year.
2. Return to winter break
If opening up is unsuccessful and we have to lockdown the economy again, it will result in a double dip development (see graph below). Most sectors in the economy will experience this dip, causing development to take longer and harder to achieve.
What scenario will arise is still uncertain. In any case Dutch entrepreneurs remain optimistic and will look for opportunities to prepare their businesses for these scenarios.
Want to know more? Watch the webinar below: