CBS: economic contraction is not too bad, but expectations are bleak

Since the first estimate, the Central Bureau of Statistics (CBS) has mainly revised investments upwards, the institute will announce on Wednesday. In the first months of this year, it appears that more investment has been made in construction, research and development than expected.

Households also spent slightly more money than expected, but overall gross domestic product (GDP) will shrink in the first quarter of 2020. This was mainly due to the drop in household consumption.

0.2 percent shrinkage compared to 2019

The Dutch economy did not shrink by 1.7 percent, but by 1.5 percent compared to a quarter earlier. That is not too bad, but it is still the fastest contraction since the low point of the financial crisis in 2009. Before that, the economy had already grown for 23 quarters in a row.

The economy contracted by 0.2 percent in the first quarter compared to a year earlier. That is also not too bad: Statistics Netherlands previously expected a contraction of 0.5 percent.

Biggest contraction of domestic consumption ever

Statistics Netherlands also announced that the overall economic picture deteriorated further in June. The economy has entered a low economic phase, according to the so-called business cycle clock of mid-June. The business cycle clock is an analysis of important economic information that Statistics Netherlands collected last month.

Due to the corona measures, consumers spent much less money than in the same period last year. In April, the Dutch spent an average of 17.4 percent less than in April 2019. This is by far the largest contraction in domestic household consumption that Statistics Netherlands has ever measured.


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