The European economy contracted by 11.9 percent in the second quarter and the member states also experienced a sharp decline. The figures on the Dutch economy in that period will be published on Friday. Then it becomes clear to what extent domestic product (GDP) has shrunk.
Rabobank analysts expect a decline of GDP in the Netherlands of 8 percent in the second quarter, while ING assumes a decline of 10 to 11 percent quarter on quarter in the so-called base scenario.
“The Netherlands is experiencing unprecedented GDP contraction, a record decline for a specific quarter. Looking at modern history, this downturn is unique,” says Marcel Klok, macro economist at ING.
“The corona measures were a bit more flexible than in a number of other countries, but the so-called intelligent lockdown is also a lockdown. Shops and restaurants have really been closed and that simply costs a lot of economic activity,” adds Klok
In the first quarter, the decline was limited to 1.5 percent. For the whole of 2020, ING is counting on a contraction of 5 to 6 percent year on year.
Spanish and British economies were hit hardest
If the impact on GDP of between 8 and 11 percent becomes reality, then the Netherlands will not perform much better than the neighboring countries. In Germany a record decline of 10.1 percent was recorded in the second quarter, in France 13.8 percent.
Spain and Italy also fell into recession in the past quarter, with a contraction of 18.5 percent and 12.4 percent respectively. The United Kingdom saw a record contraction of 20.4 percent.
Neighboring Belgium did not do much better with an economic downturn of 12.2 percent between March and July. In Austria, GDP contraction amounted to 10.7 percent, making the Alpine country’s economy slightly better than the rest of the European economies.
Economic contraction in the second quarter
- Lithuania: -5.1 percent
- Latvia: -7.5 percent
- Czech Republic: -8.4 percent
- Sweden: -8.6 percent
- Germany: -10.1 percent
- Austria: -10.7 percent
- Belgium: -12.2 percent
- Italy: -12.4 percent
- France: -13.8 percent
- Portugal: -14.1 percent
- Spain: -18.5 percent
- United Kingdom: -20.4 percent
- EU: -11.9 percent
- Eurozone: -12.1 percent
Economic damage relatively limited in Sweden
A positive outlier in the second quarter – as far as it can be – was Sweden. There, the economic contraction was ‘limited’ to 8.6 percent. There may be a link between the relatively flexible corona measures in the Scandinavian country and the smaller impact on GDP, although economists are not yet counting on this.
“It is too early to assess how different strategies for dealing with the coronavirus will affect economies,” Nordea economist Torbjorn Isaksson said in a conversation with the company. Financial Times last week. Nordea is a financial services provider that focuses on the Scandinavian market.
For the full year, economists expect a 4 to 5 percent contraction in Sweden, which would also score it better than other countries in the eurozone, but not much better than a country like Denmark, which was largely locked at the height of the corona crisis.