Economic contraction of 8.5 percent in Q2 2020

In the second quarter of this year, household spending fell by 10.4 percent relative to the first quarter; investments by 12.4 percent. Furthermore, exports and imports (goods and services) declined by 9.8 and 8.3 percent, respectively. Public consumption fell by 3 percent.

The lower output in sectors such as trade, transport, accommodation and food services and storage (mainly the latter two) as well as business services (mostly temping and travel agencies) and care all contributed significantly to the economic decline. The lower productivity in the care sector was mainly due to the fact that many health and care services were postponed or avoided during the coronavirus crisis.

Impact of the coronavirus crisis on the first estimate

Due to the coronavirus crisis, the GDP estimates for Q1 2020 and Q2 2020 are surrounded by greater uncertainty than usual during a first estimate. CBS has published quarterly data on the economy since 1987. The sharpest quarterly decline so far, 3.6 percent, took place in Q1 2009 during the financial crisis.

The rest of this news release deals with economic growth compared to Q2 2019.

GDP 9.3 percent down on Q2 2019

According to the first estimate, GDP contracted by 9.3 percent relative to Q2 2019. The year-on-year contraction was mainly due to sharply lower household consumption, but also to significantly declining investments in fixed assets and a declining trade balance relative to Q2 2019. The largest contraction so far, 4.6 percent, was in Q2 2009.

Exceptional decline in consumer spending

In Q2 2020, Dutch consumers spent 11.8 percent less than one year previously. They mainly spent less on services (accommodation and food services, recreation and culture, transport and communication and care). Spending on clothes, cars and motor fuels plummeted as well. On the other hand, consumers spent more on food, electrical appliances and home furnishings than one year previously.

Government consumption was 3.5 percent lower than one year previously. This rare contraction was largely due to the lower output in public health and care services on balance throughout the coronavirus crisis.  

Significantly fewer investments in transport equipment, buildings and machinery

In Q2 2020, the volume of investments in fixed assets was 10.7 percent down on the same quarter last year. Investments in transport equipment such as passenger cars, lorries and semi-trailers declined in particular. Moreover, investments in dwellings, office buildings and machinery were significantly lower than in Q2 2019. Only investments in computers were up year-on-year.

Strong decline in exports and imports

Exports of goods and services in Q2 2020 were 10.9 percent lower than in Q2 2019. In the previous quarter, exports still grew by 2.0 percent. Substantial year-on-year declines were mainly recorded in service exports (e.g. spending by international visitors within the Netherlands) as well as exports of transport equipment, petroleum products and machinery. Domestic exports contracted somewhat more sharply than re-exports (exports of previously imported products).

Imports of goods and services declined by 9.5 percent, mainly on account of services (including spending by Dutch travellers abroad), transport equipment and machinery. On balance, the trade balance made a negative contribution to economic growth. The contribution was positive in the previous quarter.

Unprecedented contraction in sectors most exposed to government restrictions

Production in the sector trade, transportation and accommodation and food services was down by 16.6 percent on Q2 2019. The decline in the care sector of almost 21 percent was unprecedented and caused mainly by the fact that fewer health and care services were provided on balance due to the coronavirus crisis. In the business services sector, the measures against the coronavirus crisis dealt a particularly severe blow to many temping and travel agencies. Output in the sector culture, recreation, sports and other services was 37.4 percent lower than one year previously.

Manufacturing output was down 7.9 percent on twelve months previously, with a negative outlier for the transport equipment industry and a positive outlier for the machinery industry. The construction sector produced 4.2 percent less than one year previously.

First estimate

The first estimate is published 45 days after the end of a quarter and is conducted based on information available at that moment. It provides an initial picture of the state of the Dutch economy. After the first estimate, new data continue to pour in which are used to make new calculations. The second estimate on economic growth will be released on Wednesday 23 September. In absolute terms, the adjustment of the second estimate relative to the first estimate has averaged nearly 0.04 percentage points over the past half decade, with the two extremes ranging between - 0.1 and + 0.2 percentage points. With each new estimate, CBS also recalculates the new seasonally adjusted figures of previously published quarters. This recalculation has not resulted in an adjustment of the previous three quarters.