Ever since the European debt crisis erupted, EMU internal imbalances have been in the limelight. Countries facing deficits on their Balance of Payments current account were hit relatively hard by the financial crisis, whereas countries that looked at a surplus (including the Netherlands) came through comparatively well.
The current account surplus of the Netherlands is mainly related to the internationalisation of the non-financial corporate sector. Since the turn of the century, most of the Dutch excess savings have been generated by non-financial corporations. Also contributing to the surplus was the reduction of the country’s fiscal deficit from the early 1990s. The often-cited argument that most of the excess savings can be attributed to households’ high pension savings is incorrect. Since the turn of the century, households’ excess savings have been nil.
From the early 1990s, the Dutch current-account surplus rose, owing to increased goods and services export surpluses. The current account of the Balance of Payments provides an overview of a country’s main transactions with the rest of the world. It accounts for imports and exports of goods and services, for inward and outward cross-border payments of wages, dividends and interest, et cetera. At this moment, the Dutch current account surplus is among the highest in the euro area. Discussions are currently being held in the euro area and the G-20 on how to curb the underlying global imbalances. One issue under discussion is to what extent countries with a current-account surplus – such as the Netherlands – should adjust their economic policies. In DNB’s opinion, this applies only where an imbalance is related to an underlying economic distortion.
In countries such as Spain, Portugal, Ireland and Greece, sizeable current account deficits are linked to sustained deterioration of their international competitiveness, resulting in relatively high export and low import prices. The development of wages in these countries has long been out of step with that of productivity. Conversely, a current-account surplus may be related to an overly subdued wage development. However, this does not apply in the case of the Netherlands. On the contrary, Dutch price competitiveness has declined since the second half of the 1990s, especially vis-à-vis developed countries outside the euro area.
The current account surplus of the Netherlands is mainly related to the internationalisation of the non-financial corporate sector. Since the turn of the century, most of the Dutch excess savings have been generated by non-financial corporations. Also contributing to the surplus was the reduction of the country’s fiscal deficit from the early 1990s. The often-cited argument that most of the excess savings can be attributed to households’ high pension savings is incorrect. Since the turn of the century, households’ excess savings have been nil.
From the early 1990s, the Dutch current-account surplus rose, owing to increased goods and services export surpluses. The current account of the Balance of Payments provides an overview of a country’s main transactions with the rest of the world. It accounts for imports and exports of goods and services, for inward and outward cross-border payments of wages, dividends and interest, et cetera. At this moment, the Dutch current account surplus is among the highest in the euro area. Discussions are currently being held in the euro area and the G-20 on how to curb the underlying global imbalances. One issue under discussion is to what extent countries with a current-account surplus – such as the Netherlands – should adjust their economic policies. In DNB’s opinion, this applies only where an imbalance is related to an underlying economic distortion.
