NL's focus on services spared the economy in Covid crisis

Economists expect that the Dutch economy shrank by over 4 percent last year due to the coronavirus pandemic - less than many other European countries. This has to do with the structure of the Dutch economy, which is more focused on services than production, and the good digital infrastructure helping people work from home well, NU.nl reports after speaking to various economists and experts.

Germany reported a economic contraction of 5 percent, the United Kingdom of 10 percent, and Spain of 11 percent.

"Although people-to-people services, such as hairdressers and the hospitality industry, are hugely affected by the corona crisis, a large part of the services between companies continue to run," ABN Amro chief economist Sandra Phlippen said to the newspaper.

The Netherlands good digital infrastructure enabling people to work from home helped with that. "If people don't have to go to work to be able to do it, sectors largely remain out of harm's way," macroeconomics professor Sweder van Wijnbergen of the University of Amsterdam said. "The structure of the Dutch economy means that the Netherlands is less affected than other countries."

The Dutch economy is strong in financial services, consultancy and engineering, the economists said to the newspaper. Those services are also exported and offer a lot of employment. While the extent of the virus' spread in a country also played a role in economic damage, the fact that the Netherlands is more focused on services than production played a more important role in the relatively better-than-expected economic decline, they said.

The enormous support package from the government also helped limit the damage to the economy, international macroeconomics professor Charles van Marrewijk of Utrecht University said. According to him, the the Dutch government offered "enthusiastic support" compared to many other countries. "Thanks to the support of the government, for example, unemployment was limited."

"The unprecedented support measures prevented the first blow of the spring from building, softening the second blow," Phlippen said.