Crippled by low international trade, Netherlands’ economy, and related exchange traded fund (ETF), may be in for a prolonged and deeper recession than previously thought.

The Dutch economic policy bureau (CPB) estimates a 4.8% contraction for 2009, a budget shortfall of 6.7% of GDP and a 9.5% increase in the unemployment rate for 2010, according to NRC Handelsblad. The pessimistic outlook is attributed to diminishing world trade and consumer trends leaning more toward saving than spending.

It is estimated that the Dutch economy will drop 15% on waning international trade alone for next year. Dutch exports are projected to fall 17.3% with imports down 14% for 2009.

The recession may be deeper than previously thought, and a risk of deflation still looms over the Dutch economy, reports James Pethokoukis for Reuters. The Dutch Central Bank (DNB) paints a gloomier picture for the economy with its estimated contraction of 5.4% for the year.

Problems in the financial sector could creep up from writedowns that most banks and insurers deem likely. The IMF thinks $4 trillion will be needed and $1.5 trillion has already been written off so far.

• iShares MSCI Netherlands Investable Market Index (EWN): up 2.9% year-to-date

For more information on the Netherlands, visit our Netherlands category.

Max Chen contributed to this article.

Tags: Europe, EWN, Global ETFs, Netherlands