Recession: Dutch economy shows worst ever contraction
In the second quarter of this year, the Dutch economy shrank by 8.5 percent compared to the previous quarter and a massive 9.5 percent compared to the second quarter of 2019, Statistics Netherlands (CBS) reported on Friday based on its first calculations. "Such a contraction has never been measured by CBS before," the stats office said.
The results mean the Dutch economy was officially in a recession, defined as two straight quarters where the GDP shrank. The last major recession began in 2008 and lasted for six straight quarters, followed by minor recessions in 2011 and 2012. Despite this catastrophic contraction, the Dutch economy shrank less than the average in the eurozone and in neighboring countries like Germany, the United Kingdom and Belgium, CBS said.
More than half of the gross domestic product (GDP) decrease in the second quarter can be attributed to a sharp fall in household consumption. Households spent 10.4 percent less in the second quarter than in the first, an 11.8 percent less than the year before. Investments declined by 12.4 percent quarter on quarter, and by 10.7 percent compared to the second quarter of 2019.
Exports and imports declined 9.8 percent and 8.3 percent respectively on a quarterly basis, and 10.9 percent and 9.5 percent respectively on an annual basis. And government consumption decreased by 3 percent compared to the first quarter and by 3.5 percent compared to last year.
Lower production in the sectors hard hit by the coronavirus crisis played a major role in the decline of GDP. The production of trade, transport and catering was 16.6 percent lower than in the second quarter of 2019. Hotel and catering establishments in particular were hard hit due to restaurants closing for lockdown and global travel restrictions.
The decline in healthcare amounted to an "unprecedented" 21 percent. Hospitals throughout the Netherlands had to spark to treat the thousands of coronavirus patients, bringing all non-emergency care to a near halt.
Production of total business services shrank by 12.4 percent, with the hardest blows falling among temporary employment- and travel agencies. Production of the culture, recreation sports and other services sector was 37.4 percent lower than twelve months earlier.
The industry contracted by 7.9 percent, with the transport equipment industry shrinking the most. And construction decreased by 4.2 percent compared to the second quarter of 2019.
The two quarters of a severely shrinking economy means that much of the Dutch economic progress from the start of 2014 through the end of 2019 was largely wiped out, according to data from the CBS. Last month Rabobank said that the Dutch economy is facing its deepest dip in a hundred years.