The Dutch economy is experiencing a record decline of 8.5 percent

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Due to the corona crisis, the Dutch economy experienced a record contraction in the second quarter of this year. This is evident from preliminary figures published by Statistics Netherlands on Friday. Between April and July, gross domestic product (GDP) shrank by 8.5 percent from the first three months of the year. This is largely because household consumption has declined sharply, according to the statistics office. The number of jobs also went through a record decline. Still, the figures are less bad than in many other euro area countries.

Households spent 10.4 percent less in the second quarter. Less was spent on catering, recreation and culture, transport and communication and care, according to Statistics Netherlands. Consumers did spend more on groceries, home furnishings and electrical equipment. Furthermore, exports (9.8 percent) and imports (8.3 percent) decreased.

The government spent 3 percent less, mainly because less was spent on healthcare. The fight against corona has cost a lot, but non-corona-related care has in many cases been postponed or canceled. At the same time, tax revenues declined and a lot of money had to be allocated to, among other things, soften the blow of the pandemic to the economy. As a result, government debt rose by more than sixty billion euros between the end of February and the end of June.

Job market

Earlier Friday, Statistics Netherlands shared new figures about the labor market. A record number of jobs were lost in the second quarter: 322,000. This “suddenly” reversed the job growth of the past two years. The jobs of people who cannot work but are still paid are not included. According to Statistics Netherlands, this group has grown thanks to the special emergency measure NOW, which can partly bridge loss of work.

The scheme gives the labor market figures another “flattering” picture, said chief economist Peter Hein van Mulligen. Measured by the number of hours worked, the loss is twice as great. The outlook is also not good, Van Mulligen warned. It is quite conceivable that many more redundancies are to be made in the coming period.

Shrink records

Although the economy broke all kinds of shrinkage records in the past quarter, the damage is not too bad compared to other euro countries, according to Statistics Netherlands. The European statistics agency Eurostat estimated at the end of July that GDP in euro area countries would shrink by 12.1 percent and in the European Union by 11.9. The United Kingdom recorded a 20.4 percent decline, Germany over 10 percent and Belgium over 12 percent.

Statistics Netherlands has not been able to find a conclusive explanation for the international differences, said Van Mulligen. He attributed them partly to the extent to which the economy was locked up. For example, the authorities in France and Spain were stricter than in the Netherlands, which also paralyzed larger parts of the economy. The composition of the different economies also plays a role, for example because the importance of international tourism differs from country to country. “As a result, the Spanish economy shrank faster than the Swedish.”

“I have no explanation why the economy in the United Kingdom has shrunk by more than 20 percent. I dare not say why the Netherlands appears to be doing better, ”said Van Mulligen, adding that“ less bad ”would actually be a better formulation. “It is still a lot of fun.”

Statistics Netherlands warns that the figures may still be adjusted because not all data for the calculation are available yet. A new calculation will be made in more than a month. In recent years, the new figures have never deviated more than two-tenths of a percentage point, but that may be different this year due to the corona crisis, the statisticians warn.

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