In the final quarter of 2014, the Dutch surplus on the current account of the balance of payments was EUR 12 billion, or 7% of its gross domestic product (GDP). For 2014 as a whole, the surplus came to more than 10% of GDP. The largest impact was from developments in primary income, which showed a net outgoing balance in the fourth quarter. At year-end 2014, the Netherlands' net international investment position, with capital interests measured at market value, stood at EUR 524 billion (80 % of annual GDP).
At over 7% of GDP, the surplus on the current account was sharply lower compared with the fourth quarter of 2013. On aggregate, the surplus from goods and services edged up, as did the traditional deficit from secondary income. The decline in the current account surplus can be ascribed entirely to the primary income account, which plunged into an unusual deficit, at EUR -2.7 billion, in the past quarter.
Breakdown of current account balance (% of GDP)
Incomes from direct investment are responsible for the lower balance on primary income. Both inward and outward income were lower, but the year-on-year decline in inward income, at 15%, was almost triple that of outward income. The sharp decline in Shell's profit, in part driven by low oil prices, was a major factor in the drop in income from direct investment. The resulting EUR 2.9 billion net income from direct investment could no longer compensate the traditionally negative balances of income from securities (EUR -3.4 billion) and labour income (EUR -1 billion). The fall in oil prices was also reflected in goods trade, with import and export prices being lower. Both imports and exports recorded almost fully compensatory volume increases.
Financial transactions and international investment position
Financial cross-border transactions caused the Netherlands' net securities holdings to increase (up EUR 2 billion), as well as, to a lesser extent, net direct investment and net claims related to derivatives (both up EUR 400 million). In securities transactions, net balances showed stark differences between Special Financial Institutions (SFIs) and the other sectors. Excluding SFI holdings, net Dutch securities holdings grew by EUR 17 billion, reflecting acquisitions of foreign securities worth EUR 2 billion and foreign sales of domestic securities worth EUR 15 billion, in which Ziggo's delisting also played a part. Derivatives trade also showed a clear difference between SFIs and the other domestic sectors. The latter made large-value payments abroad relating to sizeable losses on foreign exchange derivatives and, more exceptionally, commodities futures, predominantly caused by the depreciation of the euro and the steep fall in oil prices. In direct investment, considerable disinvestments of some EUR 40 billion, notably in the form of intra-group loan repayments made by and to Dutch SFIs were mutually offsetting. This means that, all in all, the current account surplus is mainly reflected in an increase in other investment.
Both financial transactions and value changes have pushed up the Netherlands' international investment position to EUR 524 at year-end 2014. Excluding the SFI sector, the Netherlands became a net holder of securities at year-end 2014. This is not true of the Netherlands as a whole, given that SFIs issue large volumes of capital market paper, while their securities holdings are relatively limited.
More infomation can be found on the page 'Balance of payments and international investment position.'