By contrast, in 2018 there was a record surplus on the current account of EUR 84 billion year-on-year (11% of GDP). Given that the previous quarters also showed year-on-year declines, it is unlikely that this level will again be achieved in 2019. However it still exceeds the 6% standard set by the European Commission in the context of the macroeconomic imbalance procedure (Macroeconomic Imbalance Procedure MIP).
As in the previous two quarters, the decline in the third quarter was mainly driven by a downward movement of the primary income balance.
Primary income balance depresses current account
Primary income dropped by 90% year-on-year to EUR 158 million in the third quarter (see Figure 1). Lower profits from foreign subsidiaries of Dutch-based companies weighed down on the revenue side. Some of these lower profits were attributable to listed companies with only a limited physical presence in the Netherlands. At the same time, expenditure increased due to higher profits from Dutch subsidiaries of foreign companies.
The balance of goods exports and imports fell by 4% year-on-year to EUR 17.6 billion. Export growth lagged behind import growth, owing in part to developments abroad, such as the muted performance of the German industry sector. Import growth was supported by increased imports of passenger cars compared to the same period in 2018.
At the same time, the services balance went up by 43 percent to EUR 2.9 billion, resulting in a year-on-year improvement of the trade balance. This was mainly due to a large company gradually reducing its activities in the Netherlands and importing fewer licences as a result.The secondary income balance was negative, as usual, and stood at EUR -945 million. This figure includes EU budgetary contributions from and subsidies to the Dutch government, as well as money transfers from migrants to their countries of origin.