During the first lockdown in the spring of 2020, unusually sharp declines were recorded in Dutch household consumption, goods exports and investments. After easing of the COVID-19 measures over the summer, the restrictions were once again tightened as of mid-October, both within and outside the Netherlands.
This was once again followed by plummeting household consumption; however, goods exports and investments suffered a less harsh impact than during the first lockdown. For the time being, the current lockdown therefore appears to have a lower impact on large parts of the Dutch economy than last year’s lockdown. This is reported by Statistics Netherlands (CBS) in its review of the Dutch economy in the year 2020.
In 2020, the economy contracted by 3.7 percent. Roughly three-quarters of this contraction could be attributed to lower household consumption. Household consumption, investments, public consumption and the trade balance all count towards gross domestic product (GDP).
In April 2020, household consumption took a severe hit, contracting by more than 17 percent. Easing of the restrictions in the summer was followed by tighter COVID-19 measures as of mid-October, which led to another slump in household consumption. The largest decline since April 2020 was recorded in January 2021. By closing of all non-essential retail outlets as of 15 December 2020, an exceptional decline was recorded in consumer spending on durable goods, aside from severe declines in e.g. accommodation and food services, recreation, sports and culture.
The volume of investments in tangible fixed assets has seen a less severe decline during the present lockdown than last spring. In May 2020, investments contracted by over 18 percent, mainly on account of fewer investments in transportation equipment.
Investments declined by over 5 percent in January 2021. During the latter part of 2020 and early 2021, less sharp investment declines were mainly recorded in transportation equipment, housing, commercial buildings and machinery, relative to the first lockdown in April-May 2020. At the beginning of Q1 2021, the capacity utilization rate was significantly higher than at the start of Q2 2020, when the utilization rate of machinery and installations reached its lowest level since measurement of this rate started in 1989. Furthermore, the overall opinion of manufacturers regarding their future output has been much more positive for months, compared to the spring of 2020.
In January 2021, the total volume of goods exports was nearly 4 percent higher than in the same month of last year. This represents the highest year-on-year growth rate ever recorded. Since the fall of 2020, goods exports have rebounded to their pre-pandemic levels. The CPB World Trade Monitor indicates as well that as of the end of 2020, international trade had returned to the level of early 2020. Exports fell by more than 10 percent in April and May 2020; in particular, less transportation equipment and petroleum products were exported.
The upturn in exports has also cushioned the impact of the current lockdown on export-oriented sectors such as manufacturing. In April 2020, the average daily output in this sector dropped sharply; an all-time low was recorded in May 2020. Manufacturing output subsequently picked up and by January 2021, it had returned to the level recorded before the coronavirus crisis.
The rebound in manufacturing came after an increase in producer confidence. In April 2020, producer confidence hit an all-time low. Less than twelve months later, the mood among manufacturers was predominantly positive again; by March 2021, producer confidence was back at its pre-pandemic level.
Consumer confidence as well showed an unusually sharp decline in April 2020. Although the mood among consumers has improved slightly over the past few months, it is still relatively negative as of March 2021. This is mainly related to their opinion on the economic situation in the previous 12 months. Their opinion on the economic situation over the next twelve months is hardly negative anymore on balance. Moreover, their opinion about their own financial situation over the next twelve months was even significantly more positive than its average over the past 20 years.
