Earnings trends depress current account balance

Statistical news
Datum 23 december 2015

The current account surplus of the Dutch balance of payments amounted to EUR 12 billion (7.5% of GDP) in the third quarter of 2015, which is significantly lower than its level twelve months ago. The surplus decline was mainly driven by profit trends at non-financial institutions. The Dutch net international investment position – the balance of Dutch claims abroad and foreign claims on the Netherlands – in 2015Q3 increased to EUR 471 billion (70% of GDP over the past four quarters) mainly as a result of value movements and portfolio investment transactions. Direct investment transactions peaked in 2015Q3, owing to a number of significant acquisitions and restructuring operations.

Current account

The current account surplus was down EUR 5 billion in 2015Q3 to stand at over EUR 12 billion. The trade balance was virtually unchanged from the level seen one year ago, but showed considerable underlying shifts. For example, natural gas exports went down by almost one quarter compared with 2014Q3, while imports went up, resulting in unprecedented net imports of natural gas. As in previous quarters, the low USD price for other energy products (including crude oil) continued to have an impact: both export and import values were considerably lower, which had a net positive effect on the trade balance. Imports of other merchandise rose while exports remained unchanged.

The external income balance was EUR 3.3 billion in the red in 2015Q3, mostly due to earnings trends. Income from foreign capital holdings of Dutch non-financial institutions declined by EUR 2.9 billion to EUR 4.8 billion, a drop of 38% compared to twelve months earlier. The decline was to a large extent attributable to the fact that Royal Dutch Shell saw its profits on foreign holdings drop sharply due to lower oil prices. It also had to make writedowns on projects in Canada and Alaska, resulting in a value decrease of foreign holdings.

Financial transactions and net international investment position

The net international investment position of the Netherlands – the balance of Dutch claims abroad and foreign claims on the Netherlands – increased by EUR 23 billion to EUR 471 billion in 2015Q3.  

Substantial new Dutch capital holdings abroad and foreign capital holdings in the Netherlands dominated third-quarter direct investment, partly as a result of acquisitions and restructuring operations by a number of multinationals. One of the most significant transactions in this respect was the coffee business merger of DE Master Blenders and Mondelez International, with the new company being headquartered in the Netherlands. The former Luxembourg cable and telecommunications company Altice also moved its head office to the Netherlands in the third quarter.  

Value trends played a major role in securities holdings. Stock market and exchange rate developments caused the value of foreign shares held by Dutch investors to fall by around 7%. The value of Dutch shares held by foreign investors dropped even further, by almost 13%. Securities transactions also contributed to the increase in the net international investment position. On balance, Dutch investors purchased foreign shares as well as foreign debt securities. On the other hand, foreign investors sold Dutch securities, with divestments of Dutch bonds being particularly large at EUR 26 billion. Dutch government paper accounted for EUR 14 billion of these sales in 2015Q3, on top of sales worth EUR 7 billion in the preceding quarter. This partly reflects the ECB's asset purchase programme, as part of which DNB made large purchases of Dutch government paper. 

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