Current-account surplus continues to rise

Statistical News Release
Date 17 June 2011

The surplus in the current account of the Dutch Balance of Payments for the first quarter of 2011 ran to EUR 17 billion, according to preliminary figures of De Nederlandsche Bank. Compared to one year earlier, the surplus rose by over EUR 4 billion. Expressed as a share of Gross Domestic Product, it grew to 11 per cent. 

The trade in goods also continued to expand. The goods balance rose by 13% or EUR 1.5 billion compared to the first quarter of 2010, to a total of over EUR 13 billion. This means that total quarterly goods exports by value first crossed the EUR 100 billion mark. The rise in exports by value (17%) was narrowly exceeded by the the rise of imports by value (18%), which also showed a rising trend, partly due to high oil prices.

The income account balance (over EUR 4 billion) doubled compared to a year earlier. Incomes from outward direct investments contributed strongly to the surplus, rising substantially compared to the first quarter of 2010 (20%) to reach EUR 12 billion. Dividends received made up EUR 9 billion of this total figure. The income from inward foreign direct invesment in the Netherlands stabilised in the first quarter at circa EUR 4.5 billion. Of this amount, EUR 1.5 billion is exported as dividends.

Chart Current account balance as a percentage of GDP

Within the financial account, direct foreign investment showed a EUR -9 billion negative balance. Conversely, almost EUR 3 billion flowed into the Netherlands in the form of equity capital. Major items in this flow were the takeovers of Draka Holding N.V. and Crucell N.V. The stock market listings for both companies were terminated during the first quarter. Italian cable producer Prysmian took over Draka Holding N.V. which carried a stock market value of EUR 850 million. US pharmaceutical maker Johnson & Johnson, which already held a 20% stake in Crucell N.V. took over the remaining 80% representing a stock market value of EUR 1.4 billion. However, owing to withdrawals of intragroup loans (EUR 4 billion), total foreign direct investment still came out negative at EUR -1.5 billion in the review quarter. Dutch companies, in turn, expanded their equity holdings in existing foreign subsidiaries by EUR 3 billion, while another EUR 4.5 billion left the country in the shape of intragroup loans.

Net inflows into the Netherlands on account of portfolio investments ran to EUR 10 billion during the first quarter of 2011. This was due primarily to relatively large purchases of Dutch securities by foreign investors. In addition to foreign purchases of shares for an amount of over EUR 1 billion, Dutch bonds (EUR 7 billion) and short-term debt certificates (EUR 12 billion) were in especially brisk demand. Dutch banks, in particular, were active issuers of capital and money market paper during the first quarter, most of which were scooped up by foreign investors. During the first quarter,  Dutch investors bought EUR 12 billion worth of foreign debt certificates, while selling foreign equity worth just under EUR 2 billion. As in preceding quarters, German debt certificates were in especially strong demand, with Dutch investors purchasing as much as EUR 8 billion of such paper. Meanwhile, a substantial EUR 5 billion was invested in French bonds and money market paper. These purchases were mirrored in part by sales of debt certificates issued in the USA (EUR -4.4 billion) and Italy (EUR -1.5 billion).