CBS: never did the Dutch economy shrink as much as during the lockdown, situation 'inky black'

 

NEWSECONOMIC CONTRACTION

CBS: never did the Dutch economy shrink as much as during the lockdown, situation 'inky black'

 

The Dutch economy shrank by 8.5% in the second quarter – at the height of the corona crisis – compared to a quarter earlier. The largest decline ever recorded, according to the Central Bureau of Statistics.

 

Bard van de Weijer14 August 2020, 10:22

https://www.volkskrant.nl/economie/cbs-nooit-kromp-de-nederlandse-economie-zo-sterk-als-tijdens-de-lockdown-situatie-inktzwart~bba987de/

 

Half of the decline in gross domestic product (GDP) was caused by consumers spending less during the lockdown,  reports cbs based on preliminary figures. As expected, the  lockdown  reduced the amount of money spent in the hospitality industry and on recreation, culture and transport, among other things. Because fewer car kilometres were made, consumers also spent less money on petrol and diesel.

 

The decline is "unprecedented," according to CBS chief economist Peter Hein van Mulligen, "or a thousand synonyms for that word." The contraction was much larger than that during the financial crisis, when GDP declined by 3.6% in the first quarter of 2009. Even in the 1930s, the impact was not as big as it is today, says Van  Mulligen.

 

Although some signs of recovery are now visible, the economic situation is still 'inky black' and the ongoing corona threat is left uncertain for the future, according to the CBS economist.

 

The industries that suffered the most at the height of the corona crisis were trade, hospitality, transport and storage. Temporary employment and travel agencies were also struggling as planned. Noteworthy: the heavily taxed healthcare sector also had less income.

 

Although hospitals were full of corona patients, many other care was postponed or avoided, according to cbs, reducing revenue by more than 20 percent on balance. The sharp decline in demand for mainstream care has even led to a "rare" 3.5 percent drop in government consumption.

 

At the height of the European corona crisis, much less investment and export was also made. In particular, the export of services (such as expenditure by foreign visitors in the Netherlands, which the CBS calls under this heading), transport equipment, petroleum products and machinery was considerably lower than a year earlier.

 

Despite the unprecedented contraction, the decline in the Netherlands is less significant than in many other European countries, including the United Kingdom (minus 20 percent), Germany (well minus 10 percent) and France (minus 13 percent). How this can be done is difficult to say, according to CBS chief economist Peter Hein van Mulligen.  "The intelligent  lockdown may play a role, but that can't be the whole explanation," he said in an initial statement. 'Because a country like Sweden, which barely had a lockdown,  has been affected about as hard as we are.'

 

The fact that Spain is suffering even more, for example, has to do with the severity of the lockdown  there, but also with the fact that this country is heavily dependent on tourism, one of the worst affected sectors.

 

Possible resignation surge

In the last period, 322 thousand jobs were lost in the Netherlands, about 3% of the total. That number has flattered, according to CBS, because the number of hours worked fell by 6 percent over the same period. This means that many people at home were thumbing thumbs, but still had a job. Public aid probably plays a role here: companies were able to keep staff employed thanks to various schemes, although there was temporarily no work for them.

 

Those who had a permanent job, thanks to the state aid, usually got through the crisis quite nicely. The hits were particularly similar to flex workers, workers on annual and zero-hours contracts. They lost their income from work on a large scale. 'Young people and the less educated were dealt the heaviest blows', says Van  Mulligen. If the corona crisis continues or flares up again, it will also affect people with permanent jobs. 'If corona increases in severity, there may still be a lot of layoffs. The outlook is not favourable.'

 

Since 1987, CBS has been measuring quarterly changes in GDP. Due to the exceptional situation, the figures presented by CBS on Friday are surrounded by more uncertainty than usual, according to the statistics office.