Netherlands: Economy contracts in Q1 at sharpest rate since 2009
June 24, 2020
A second reading of national accounts data showed that the economy suffered slightly less than previously estimated in Q1, with GDP decreasing a revised seasonally-adjusted 1.5% (previously reported: -1.7% s.a. quarter-on-quarter; Q4: +0.5% s.a. qoq). Nonetheless, Q1's reading marked the sharpest contraction since Q1 2009.
The softer contraction reflected a slightly less steep fall in household consumption of 2.6% (previously reported: -2.7% s.a. qoq; Q4: +0.7% s.a. qoq), while fixed investment expanded 0.6%, contrasting the previously reported 1.1% contraction (Q4: +1.3% s.a. qoq). On the other hand, public consumption fell at a sharper 1.5% qoq (previously reported: -1.4% s.a. qoq; Q4: +0.3% s.a. qoq).
Exports of goods and services contracted 1.9% in the quarter (previously reported: -3.0% s.a. qoq), marking the worst result since Q2 2015 (Q4: +0.6% s.a. qoq). Meanwhile, imports of goods and services contracted 2.0% (previously reported: -3.5% s.a. qoq; Q4: +0.6% s.a. qoq).
On an annual basis, the economy shrank 0.2% in Q1, swinging from Q4's 1.6% expansion and marking the worst reading since Q2 2013.
This year, the economy is expected to shrink at the sharpest rate since at least World War II. While fiscal stimulus should soften the blow somewhat, Covid-19 will extinguish domestic and foreign demand. Moreover, the balance of risks is further tilted to the downside by Brexit uncertainty, with the EU and the UK continuing to squabble over future relations and the trade agreement. Developments in the German economy will also have a key bearing on the Dutch economy.
Author: Jan Lammersen, Economist