Statistical News Release: Current account surplus contracts in first quarter

Statistical news
Datum 27 juni 2019

The surplus on the current account of the Dutch balance of payments fell by 10% to EUR 18.1 billion at the end of the first quarter of 2019, or 9% of the Dutch GDP. By contrast, in 2018 there was a record surplus on the current account.

Goods import growth outpaces export growth

The decline of the current account surplus was driven by a lower visible trade surplus, among other factors (see Figure 1), which dropped EUR 1.8 billion to EUR 17.6 billion year-on-year. Underlying goods imports showed stronger growth than exports in terms of both volume and value. Growth in goods imports and exports was depressed due to one specific corporation moving a substantial part of its trade flows abroad as of October 2018. This affected goods exports more than imports, while for services this was the other way round. The net effect on the trade balance was neutral.

On a year-on-year basis, the services balance surplus went up by EUR 3 billion to EUR 4.5 billion.

The primary income balance showed a EUR 1.5 billion deficit, compared to a EUR 1.3 billion surplus in the first quarter of 2018. Foreign investors in Dutch non-financial corporations saw their income from these cross-border investments (profits, dividends, interest) rise more sharply than Dutch investors abroad.

Less restructuring by multinationals

The financial account of the balance of payments shows that gross direct investment transactions normalised in the first quarter of 2019, following substantial disposals at the end of 2018 (see Figure 2).

Investments by Dutch entities in foreign group companies fell by EUR 198 billion in the fourth quarter of 2018, while foreign investments in Dutch group companies went down by EUR 187 billion. The disposals were made by a number of large, mainly United States-based multinationals. Seeking to simplify their international group structure, they liquidated Dutch and foreign intermediate holdings. In the Netherlands, they are typically shell companies. Some disposals were related to US corporation tax cuts made in early 2018.

Dutch businesses' foreign direct investment went up by EUR 21 billion, while foreign direct investments in the Netherlands went down by EUR 20 billion. Conversely, foreign investors increased their Dutch securities holdings by EUR 32 billion, while Dutch investors expanded their foreign securities holdings by a mere EUR 4 billion.