THE HAGUE, WILLEMSTAD - The outbreak of the coronavirus already has major economic consequences. If the situation worsens in more countries, corona can lead to a global recession and the Dutch Kingdom is not spared.

Economists of the Dutch Rabobank predict this based on a calculation of a so-called pandemic scenario. "In the situation of a global pandemic, economic losses in 2020 could go much further," the Rabo economists state in their analysis.

Rabo economist Hugo Erken thinks that the economic damage is already worse than expected by the Dutch Central Planning Bureau (CPB). Last week the CPB assumed economic growth of 1.4% this year. "We have already adjusted our vision based on the figures that we see coming in," says Erken. Due to the corona crisis, the Dutch estimate has been lowered by the Rabo from 1.4% to 0.7%.

In a pandemic scenario, it looks much worse. "The Netherlands will then be in a recession. And that is not surprising at all for a small, open economy," says the economist. He then counts on a contraction of 0.2%. Many activities are now standing still in China, South Korea and Italy. This risk scenario assumes that this will be the case in many more countries.

The Chinese economy then comes to a complete standstill in the calculation of Rabobank. Countries such as the United States, Japan, Germany, France, Italy and the Netherlands end up in a recession. "This economic crisis could become even worse if it turned into a financial crisis, for example when the number of bankruptcies worldwide is rising sharply."

"In the pandemic scenario you have a huge loss of production, also in the Netherlands," explains Nic Vrieselaar of the Rabo. "If people have to work en masse at home and close schools, the question is how productively people work." Lize Nauta: "In addition, you are not sure whether all IT systems will continue to work if so many people start working remotely."

Now it is mainly sectors that directly or indirectly trade with China or Italy that are affected. If the situation escalates, production stops in more countries. Vrieselaar: “There are also domestic problems, such as fewer events, less restaurant visits and companies that are also stationary here. Then the demand for other services, such as cleaning, decrease. Such a chain reaction can lead to bankruptcies."

Hugo Erken does not exclude the possibility that such a crisis will also cause structural damage: "Companies are coming under pressure and might cut back on research. Perhaps entrepreneurs are recovering production from China. And already 290 million children worldwide do not go to school because of corona. That also causes permanent damage."

According to experts, Curaçao is doing its utmost to keep the virus away from its borders but now what’s more important is to install a task force to analyze the economic impact this will have on the island. Curaçao is already in a financial crisis and the only sector that has shown growth is tourism. This could also change especially now that the American government has alerted its citizens not to go on a cruise ship.