Economic contraction 0.1 percent in Q4 2020

With the release of data on Q4, the first annual growth rate over 2020 has become available as well. Last year, GDP shrank by 3.8 percent year-on-year. The decline is slightly stronger than in 2009, when GDP contracted by 3.7 percent due to the credit crisis. It is therefore the strongest contraction ever recorded by CBS.

Households spent 1.4 percent less in Q4 than in Q3 2020. Public consumption declined as well, by 0.1 percent. Exports and imports of goods and services increased by 1.0 and 1.1 percent respectively. Finally, investments were up by 1.8 percent.

Lower output in the sector trade, transportation and accommodation and food services was a particularly significant factor in the GDP contraction. Business services, manufacturing and information and communication, on the other hand, contributed positively to economic development.

Impact of the coronavirus crisis on the first estimate

Due to the coronavirus crisis, the growth figures are surrounded by greater uncertainty than usual during a first estimate.

The rest of this news release deals with the economic contraction in 2020.

GDP 3.8 percent down in 2020

According to the first estimate, GDP contracted by 3.8 percent in 2020. In 2019, the economy still grew by 1.7 percent. The contraction was mainly due to lower household consumption, but aggravated by declining investments in fixed assets and a declining trade balance. However, public consumption showed slight growth.

Decline in consumer spending mainly due to lockdown

In 2020, consumers spent 6.6 percent less than in 2019. This is the largest decline in household consumption ever recorded by CBS. Consumers mainly spent less on accommodation and food services, recreation and culture, transportation and clothing. However, they spent more on food, home furnishings and electrical appliances compared to the previous year.

Public consumption grew by 0.2 percent. Collective consumption in particular (expenditure on public services such as police, public defence and public administration, which cannot be attributed to individual citizens) was higher than in 2019. 

Fewer investments in transport equipment

In 2020, the volume of investments in fixed assets was 3.2 percent down on 2019. Investments in transport equipment such as passenger cars, lorries and aircraft declined in particular. Investments in dwellings and office buildings were down as well. However, investments in computers and infrastructure were up year-on-year.

Decline in exports and imports

In 2020, exports of goods and services were 4.3 percent lower than in 2019. 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 and petroleum products. On the other hand, exports of chemical products grew most rapidly. Domestic exports contracted by 3.7 percent, while re-exports (exports of previously imported products) were down by 0.3 percent.

Imports of goods and services declined by 4.5 percent, mainly on account of services (including spending by Dutch travellers abroad), transport equipment and minerals.

The contraction in imports was relatively larger than in exports, but in absolute amounts exports declined more sharply. As a result, the trade balance made a negative contribution of nearly 0.3 percentage point to economic growth.

Major contraction in accommodation and food services and in culture and recreation

The volume of the value added in accommodation and food services was down by almost 41 percent, due to several lockdowns in 2020. At 24.5 percent, output contraction in the sector culture, recreation, sports and other services was exceptionally large as well. For a major part of the year, events, festivals and performances and the like were not allowed, or only held for small groups. Sports clubs and recreational parks were also open to a limited extent or closed completely for a major part of the year.

Other sectors with a sharp decline were mining and quarrying, the transport sector, business services and care. The contraction of mining and quarrying is related to the further scaling back of gas extraction. In the transportation sector, the contraction was almost 16 percent. In addition to freight transport, this sector includes public transport and aviation, both of which have been severely affected by the coronavirus crisis.

The value added of total business services was 6.1 percent lower than one year previously. Within business services, contraction was particularly strong in the temporary employment and travel sector. Providers of specialised business services, such as architects and consultancies, on the other hand, recorded slight growth.

Health care production fell by 5.1 percent because, on balance, fewer health and care services were provided during the coronavirus crisis. In hospitals, for example, many appointments and operations were postponed or cancelled, especially in Q2. GPs also provided less care during the period when the coronavirus pandemic was at its worst.

Manufacturing shrank by 2.3 percent, with the transport equipment industry as the most negative outlier and the machinery industry as the largest positive outlier. Output in the construction sector was 0.4 percent down year-on-year.

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 Friday 26 March. In absolute terms, the adjustment of the second estimate relative to the first estimate has averaged 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.