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 contraction has never been measured before”, reports the Central Bureau of Statistics (CBSFriday.
Two quarters of contraction in a row speak of 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. Even in the 1930s, we have not seen such a decline.”
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 shrinkage 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.
Consumers spent 10.4 percent less in the second quarter than in the first three months of 2020, and investments 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.”
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 catering 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 as a result of the virus.”
Still, there are some bright spots at the end of the second quarter. “But as long as corona is still here, the problems for the economy are also not over.”
The Netherlands is also highly dependent on exports and because the corona virus is spread everywhere, international trade also decreased significantly. “And inbound tourism, which is counted as exports of services.”
Compared to other European countries, the Netherlands has performed 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.”
Much greater downturn than during the financial crisis
The decline of 8.5 percent on a quarterly basis and 9.3 percent on an annual basis is based on an initial estimate by Statistics Netherlands. Usually the final figures do not deviate much from this. The corona crisis does cause greater uncertainty, notes Statistics Netherlands.
The statistics office has measured economic growth since 1987. Until the past quarter, the 3.6 percent contraction in the first quarter of 2009 during the financial crisis was the largest measured decline.