Economic contraction of 1.7 percent in Q1 2020

During the first quarter of this year, households spent 2.7 percent less than in the final quarter of 2019. It is the largest decline in the history of the series, which started in 1988. Public consumption fell by 1.4 percent. Investments decreased by 1.1 percent. Furthermore, exports and imports of goods and services declined by 3.0 and 3.5 percent, respectively.

On the production side, the sectors showing the sharpest decrease were culture, recreation, sports and other services; trade, transport, accommodation and food services and storage; and government, education and care. The output performance of these sectors slumped by 7.1, 3.4 and 2.9 percent respectively on the previous quarter. Standing out positively was the construction sector with 5.5 percent output growth.

The first quarter gave a very mixed picture. Initially, there was economic growth in the first two months. This was interrupted by the global COVID-19 pandemic as of the second half of March and the associated measures affecting economic activity on an unprecedented scale.

Impact of the coronavirus crisis on the first estimate

The growth rates are surrounded by greater uncertainty than is usually the case during the first estimate.

The rest of the news release deals with economic growth compared to Q1 2019.

GDP 0.5 percent down on Q1 2019

According to the first estimate, GDP was 0.5 percent down on Q1 2019. Year-on-year contraction was mainly due to lower household consumption and to stock movements.

Consumer spending down

In Q1 2020, Dutch consumers spent 1.3 percent less than one year previously. It was the first decline in six years’ time. In March, household consumption fell by as much as 6.7 percent (adjusted for shopping days), after two consecutive months of growth. In Q1, consumers mainly spent less on services (accommodation and food services, recreation and culture in particular) and clothing. They did spend more on food, however. In mid-March, cafés and restaurants were required to close their doors; shopping streets were almost empty. On the other hand, supermarkets recorded a higher turnover. For the first time in around four years, government consumption was lower than one year previously.

No export growth

Exports of goods and services were at the same level as in Q1 2019. In the previous quarter, exports still grew by 3.2 percent. Exports of chemical products, electrotechnical machinery and appliances were up in the first quarter of this year, while exports of transport equipment and natural gas declined year-on-year. Re-exports (exports of products previously imported) grew, while domestic exports contracted.

Imports of goods and services declined by 0.9 percent. On balance, however, the trade balance made a positive contribution to economic growth. The contribution was negative in the previous quarter.

More investments in infrastructure, office buildings and machinery

In Q1 2020, the volume of investments in fixed assets was 0.9 percent up on the same quarter last year. Investments in infrastructure, office buildings and machinery grew in particular. However, investments in transport equipment such as passenger cars, lorries and semi-trailers declined.

Situation among sectors varies strongly

The blow of the coronavirus crisis hit many companies hard. However, not all sectors were hit equally hard. Striking are the declines in the sector culture, recreation, sports and other services, the sector public services, education and care and the sector trade, transportation and accommodation and food services.

In Q1, output in the sector culture, recreation, sports and other services was more than 5 percent lower than one year previously. Events, performances and the like are not allowed since the start of the coronavirus crisis, and sports clubs and hairdressers have had to close their doors. The decline in the care sector of almost 4 percent is exceptional and is mainly caused by the fact that fewer health and care services have been provided on balance due to the coronavirus crisis. Hospitals postponed or cancelled many appointments and operations in the final weeks of March. The number of referrals by general practitioners decreased and most dentists were only allowed to provide emergency and semi-emergency care. Furthermore, less care was provided by the other large groups of care institutions, such as mental health care, care for the disabled, youth care and child care centres.

Production in the sector trade, transportation and accommodation and food services was also down on Q1 2019. In the last weeks of March, cafés and restaurants were required to close their doors due to the measures against the spread of coronavirus. Aircraft have been grounded. The trade sector recorded a small increase in output.

A positive outlier was the construction sector, which produced 3.1 percent more than one year previously. Output in the construction sector still shrank in the preceding quarter. The growth can be attributed to construction of new buildings and infrastructure.

Manufacturing output was nearly equal to twelve months previously, with a negative outlier for the transport equipment industry and a positive outlier for the food, beverages and tobacco industry. The production of business services was also at around the same level as one year previously. The production of specialised services (including accountancy, consultancy and advertising agencies) grew, while the production of other business services (including temping and travel agencies) contracted.

First estimate

The first estimate is conducted 45 days after the end of a quarter and is based on information available at that moment. CBS provides a first picture of the state of the Dutch economy. After the first estimate, new data are continually pouring in, which are used to make new calculations. The second estimate on economic growth will be released on Wednesday 24 June. 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.

The figures presented in this news release are provisional and subject for revision.