Dec. 19 (Bloomberg) -- The Dutch budget deficit will narrow less than previously forecast next year as the euro area’s fifth-biggest economy shrinks and unemployment increases, government planning agency CPB said.
The deficit will be 3.3 percent of gross domestic product in 2013, after a shortfall of 3.8 percent in 2012, CPB said in economic forecasts released today in The Hague. That would exceed the European Union’s 3 percent limit and is wider than the 2.7 percent the agency predicted on Sept. 18. It also said that the economy will keep shrinking next year.
“The Dutch economy has already been contracting for a year and a half,” CPB said in a statement. “Only in the second half of 2013 will the economy recover slightly.”
The Dutch central bank was more pessimistic on Dec. 10, when it predicted a deficit of 4.1 percent for this year and a shortfall of 3.5 percent for 2013 and 2014. Finance Minister Jeroen Dijsselbloem said then that he does not exclude additional budget cuts. The coalition of the Liberal party and Labor, sworn in on Nov. 5, is planning budget cuts of about 16 billion euros ($21 billion) in the next four years.
The economy will contract 0.5 percent in 2013 after shrinking 1 percent this year, CPB said. It predicted unemployment will increase to 6 percent in 2013.
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