Dutch current account surplus remains high
The surplus in the current account of the Dutch balance of payments turned out at over EUR 10 billion in the third quarter of 2011. This means a decline has occurred since the first and second quarters. Yet the balance is still higher by EUR 1.5 billion than it was in the corresponding quarter of 2010. This appears from balance of payments figures De Nederlandsche Bank has published today on its website.
The first and second quarters of 2011 showed increased current account balances, by a respective EUR 3 billion and EUR 5 billion compared to the same quarters a year earlier. If the balance for the last quarter of 2011 comes out equal to that of the final quarter of 2010, the surplus across 2011 will be considerably higher than across the past three years and only just under the all-time high recorded in 2006 (see Chart 1). About one-third of the increases during 2010 and the first nine months of 2011 reflects increased trade balance surpluses owing to a slightly faster value growth of exports than of imports. Two-thirds of the balance rise, however, is due to strongly risen receipts in the income account. These in turn correspond to the profits earned by foreign subsidiaries of Dutch multinationals, which have shown a rising trend since late 2009.
The financial account of the Dutch balance of payments shows a return to positive net foreign direct investments in the Netherlands during the third quarter, although the positive balance was small (EUR 0.5 billion). The three preceding quarters had shown negative foreign direct investment balances. Conversely, Dutch corporations expanded their outward direct investments during the third quarter of 2011, by EUR 2 billion. These investments were effected in countries outside the euro area. Outward direct investments in euro countries declined by over EUR 1 billion, whereas countries outside the euro area received almost EUR 3 billion in net direct investments from the Netherlands. Since 2007, the share of non-euro countries in total Dutch outward direct investments has been growing tentatively. In relative terms, the shift from about 54% at end-2007 to over 60% at end-September 2011 appears subdued (see Chart), but in absolute terms it represents a value of almost EUR 45 billion.
Turning to portfolio investments, the third quarter of 2011 saw relatively high net sales of Dutch securities by foreign investors, totalling EUR 19 billion. Foreign investors’ divestments of government bonds were especially brisk (EUR 11 billion). In part, this was due to redemptions; the rest was scooped up by domestic institutional investors. Conversely, Dutch investors made net purchases of EUR 3 billion in foreign securities, the balance of debt securities bought (EUR 11 billion) and equities sold (EUR 8 billion). As in preceding quarters, debt securities from Austria, Finland and Germany were in highest demand. Offsetting this were net sales of debt securities from, predominantly, Italy, France and (to a lesser extent) Spain. In the case of France, the net sales marked a turnaround compared to previous quarters.