* GDP seen down 3.5 pct in 2009, down 0.25 pct in 2010
* Challenges for government finances increased due to crisis
(Adds CPB comment, detail)
THE HAGUE, March 17 (Reuters) - Output of the Dutch economy may emerge from the current crisis at a structurally lower level due to a sharp decline in world trade, putting the government's budget under pressure, a government think tank said on Tuesday. The Centraal Plan Bureau (CPB) confirmed last month's expectations that the Dutch economy, which relies heavily on exports, will contract 3.5 percent in 2009, the biggest fall since World War Two.
"The challenges for government finances in the long term have become significantly greater as a result of the crisis," CPB said in a statement.
The credit crisis could damage the economy in the medium as well as the short term. "It is therefore not unlikely that production in the Netherlands will remain at lower levels for a long time to come," it added.
The government's budget is expected to show a deficit of 2.8 percent of GDP this year and of 5.6 percent in 2010. This compares with surpluses of 0.3 percent and 1.0 percent in 2007 and 2008 respectively.
Measures to cut government expenditures, which the cabinet is currently discussing, may help to improve the budget in the medium to long term, the CPB said. (Reporting by Gilbert Kreijger; editing by David Stamp)