The global recession has hit the Netherlands and its exchange traded funds (ETFs) hard, but what lies ahead for the economy?

The Netherlands’ Central Planning Agency, or CPB, states that the Dutch economy is forecast to contract 3.5% in 2009, the largest contraction since 1931.  As for 2010, the agency expects the nation to contract another 0.25%.

In addition to this alarming statistic, the Global Financial Newswire reports the following gloomy numbers:

• Private consumption is expected to drop by 0.25%; however, purchasing power is expected to rise by 2%
• Consumer spending is expected to decline by 0.5%
• Business investments are forecast to decline by 11% in 2009 and by 12% in 2010
• Consumer price inflation is expected to be around 1% in both 2009 and 2010
• The increase in average contract wage is expected to be 3% for 2009 and 1.5% for 2010, whereas unemployment is expected to jump to 5.5% for 2009 and 8.8% for 2010
• GDP is expected to shrink by about 3% because of a drop in exports of approximately 10.75%
• The government’s deficit is expected to be around 2.8% of GDP for 2009 and 5.6% of GDP in 2010

These are downbeat numbers for sure, but one shouldn’t count out the economy yet – the government has been struggling to come up with a rescue plan for the economy.

The iShares MSCI Netherlands Index (EWN) is down 17.6% year-to-date.

Kevin Grewal contributed to this article.

Tags: Europe, EWN, Global ETFs, Netherlands