‘This shrinkage is unprecedented, more than twice the crisis in 2008’

The Dutch economy took its biggest-ever hit from the global coronavirus pandemic as lockdowns brought activity in the country to a standstill, data showed on Friday 14 August 2020. The EU’s fifth-biggest economy shrank by 8.5 percent in the period from April to June compared with the preceding three months, Statistics Netherlands (CBS) said.

8.5 percent GDP contraction in Q2

According to the second estimate of gross domestic product (GDP) conducted by CBS, GDP contracted by 8.5 percent in Q2 2020 relative to the previous quarter. The decline was mainly due to falling household consumption, while investments and the trade balance also fell significantly. Relative to one year previously, GDP contracted by 9.3 percent.

'From a historical perspective, this shrinkage is unprecedented. More than twice the crisis in 2008. These are simply dramatic figures', says Bas Jacobs, Professor of Public Economics at Erasmus School of Economics.

Consumer and producer confidence less negative

According to CBS, the economy has been recovering in recent months. The general economic picture in August is less gloomy, although the Netherlands is 'still deep in the recession'. There are bright spots: both consumer and producer confidence are less negative. In July, confidence improved compared to the previous month. Both are positioned below their long-term averages.

The Dutch Government should really think carefully about a new series of support measures. Jacobs: ‘It is good that we were able to absorb the blow in the short term. It is crucial to keep the virus under control for the effectiveness of any new funding round. If that doesn't work and entire industries would become unprofitable forever, then there's no point in supporting them any longer.’

Interview Radio Rijnmond

More information

Listen to Bas Jacobs’ interview at NPO Radio 1 (programme: Met het Oog op Morgen) or download his interview at Radio Rijnmond above, both on Friday 14 August 2020:

Read the article Dramatische krimp van 8,5% was ergens ook een meevaller, published by Het Financieele Dagblad on 14 August 2020.

Additional information

On Wednesday 23 September 2020, CBS will publish the second estimate of GDP and employment over Q2 2020.

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