In the first quarter of 2015, the Dutch surplus on the current account of the balance of payments was EUR 21 billion, or 13% of its gross domestic product (GDP). The 2015 first-quarter surplus is EUR 1 billion above that recorded in the first quarter of 2014. Goods and services and income all contributed to this rise. The Dutch net international investment position grew to EUR 708 billion, or 107% of annual GDP. Driven mainly by capital gains, underlying external claims and liabilities increased.
In the first quarter of 2015, the Netherlands achieved a higher surplus on goods and services compared to the first quarter of 2014. The growth of the balance on goods was the result of lower export (-3%) and import (-5%) values, which were fully attributable to lower export and import prices. Trading volumes increased. The decrease in value was concentrated in energy products (natural gas, oil and other energy sources). The price for crude oil in USD was considerably lower this quarter compared to the same period last year, leading to a lower price in EUR despite the higher USD exchange rate. Services saw a rise in the value of exports (7%) as well as imports (6%) compared to the year before, broadly driven by travel, business services, transportation (albeit to a lesser extent) and other services. Profits on foreign equity capital and interest on intragroup loans again yielded the Netherlands more than it had to pay abroad, resulting in a positive balance of EUR 11 billion. Income from securities and capital market paper showed an opposite picture, with negative balances of EUR -1 billion and EUR -4 billion, however, following the atypical deficit in the fourth quarter, the Netherlands saw an increase in primary income flows from abroad again.
Financial transactions and net international investment position
Both external claims and liabilities went up, by EUR 68 billion and EUR 54 billion respectively. All in all, cross-border financial transactions contributed to the rise of the Dutch net international investment position. Direct investments were an exception to this pattern. Foreign direct investment in the Netherlands amounted to EUR 19 billion, mainly driven by the takeover of the Dutch real estate fund Corio N.V. by the French Klépierre. Dutch direct investment abroad lagged behind with EUR 12 billion.
Securities transactions saw decidedly large sales, both in Dutch sales of foreign securities (EUR 10 billion) and foreign sales of Dutch securities (EUR 20 billion). The sale of foreign securities amounted to EUR 23 billion and concentrated exclusively on the equities trade, with pension funds and investment funds limiting their foreign holdings (due in part to the pension funds withdrawing their participations). This was offset by foreign bond purchases worth EUR 13 billion, with French, US and Belgian bonds proving most popular. Foreign securities sales exclusively concerned Dutch capital market paper, spread over different sectors. On balance, Dutch money market paper was placed abroad.
In the first quarter of 2015, the Dutch net international investment position mainly increased as a result of value changes. Combined with financial transactions this resulted in a rise of net external assets by EUR 135 billion to EUR 708 billion. A substantial part can be attributed to the pension funds and related entities. These institutions heavily invest in foreign bonds, which strongly increased in value due to fallen interest rates. Moreover, they have concluded interest rate derivatives contracts on a large scale to hedge against falling interest rates. Now that interest rates have been low for a prolonged period, the value of those derivatives has increased. Naturally, pension funds' liabilities also increased in value, but these liabilities are of a domestic nature.