The Dutch economy contracted by 8.5 percent in the second quarter of this year compared to the previous quarter, when it was also already in decline. “Such a shrinkage has never been measured before”, the Central Bureau of Statistics (CBS) reports Friday.
Two quarters of contraction in a row is also referred to as a recession. “The word recession is hardly appropriate here,” says chief economist Peter Hein van Mulligen of Statistics Netherlands. “There has been colossal damage to the economy two quarters in a row with a total contraction of 10 percent.”
More than half of the fall in gross domestic product (GDP) in the second quarter, the first full quarter during the corona crisis, can be attributed to a decrease in consumer spending. “But the decline is actually everywhere,” says Van Mulligen.
“Especially in the sectors most affected by the lockdown, such as culture and recreation, transport and catering.” This also includes the travel and aviation sector, for example. But lower production in health care, due to postponed and avoided health care treatments, also contributed to the decline.
Even without a lockdown it is less busy
The economic downturn will continue without a lockdown, according to Statistics Netherlands. “The shrinkage is primarily caused by the corona virus. Because since the hospitality industry has reopened, it is still not busy, except for a few nice days,” says the chief economist. “People are now choosing not to do things because of the virus.”
The Netherlands is also highly dependent on exports and because the corona virus is everywhere, international trade also decreased significantly. “And inbound tourism, which is counted as exports of services.”
Compared to the other countries in Europe, the Netherlands did relatively better for the time being. “The contraction in the Netherlands was smaller than the average in the eurozone and in neighboring countries, such as Germany, the United Kingdom and Belgium.”
Consumers spent 10.4 percent less in the second quarter than in the first three months of 2020, investment fell by 12.4 percent. “Exports and imports of goods and services fell by 9.8 and 8.3 percent, respectively. Government consumption finally fell by 3 percent.”
Much greater downturn than in the financial crisis
The decline of 8.5 percent quarter on quarter and 9.3 percent on an annual basis is a first estimate by Statistics Netherlands. Usually the final figures do not deviate very much from this. The corona crisis does cause greater uncertainty, notes the figures.
Statistics Netherlands has measured economic growth since 1987. Since then, the 3.6 percent contraction in the first quarter of 2009 at the time of the financial crisis was the largest decline until the past quarter.