Continued high current-account surplus caused by substantial third-quarter services balance

Statistical News Release
Date 17 December 2013

Over the third quarter of 2013, the Netherlands recorded a surplus of over EUR 14 billion (10% of GDP) on its BoP current account. A major share of the surplus was due to services – usually a low contributor in the third quarter. External assets of the Netherlands came to EUR 305 billion.

Most of the current-account surplus was, as usual, achieved in the goods sector (EUR 12.4 billion), followed at a distance by services (EUR 2.4 billion) and incomes (EUR 3.2 billion). Both the goods and the services balances were higher than a year ago, with the increase in services standing out in particular. The income and income transfers accounts showed a decline from last year.

Current account balance

The increased goods surplus was accounted for by a somewhat lower import value (-2% compared to 2012Q3), whereas the export value was virtually identical (+0.3%). Both import and export volumes increased, however. Values of energy imports and exports (excluding natural gas) were markedly lower than a year before, in contrast to export values of other goods, which after two lean quarters recorded 2% growth, compared to unchanged imports by value. This latter rise was partly attributable to a higher number of working days.
Imports and exports of services showed a more pronounced development. For a similar year-on-year upsurge in services exports (by over 9%), we must look back to the final quarters of 2010. Import growth, by contrast, after two quarters of zero growth, dipped into the red for the first time since the third quarter of 2009. The image projected by the lower services imports and higher services exports is also reflected by each of the largest services components individually: transport services, travel services and other business-to-business services (mainly intragroup services, accounting and business consultancy, agricultural and mining services), together accounting for some 80% of both services imports and exports (see also the Chart). Dutch private spending on cross-border travel during this year’s holiday season, for instance, dropped 5%, whereas spending by foreign travellers in the Netherlands, in contrast, rose buoyantly by over 13%. This marks a turnaround compared to a year ago, when imports surged by 7% alongside stable exports.

Services account, selected components

Mirroring the surplus in the financial leg of the current account was especially a EUR -20 billion portfolio investment balance. Whereas Dutch investors made net purchases of EUR 13 billion in foreign securities – especially debt securities (+EUR 12 billion)  – foreign investors, on balance, sold EUR 6 billion worth of Dutch securities. This latter figure was mainly attributable to the delisting of D.E. Masterblenders 1753 and the concurrent buyout of its shareholders. With EUR 9 billion worth of net purchases, Dutch money market paper found a willing market abroad, owing to the net issue of short debt paper by Dutch government.
Dutch investors bought mainly British and French debt securities (around EUR 5 billion each). This contrasted with EUR 3 billion in net sales of German paper, continuing a trend observed since early 2013. This year's decline in the German debt securities balance is also due to price effects. Still, at 25%, German debt paper continues to make up the largest item in Dutch residents' debt portfolios (see the Chart).
Dutch investors' holdings of foreign debt paper

The balance of inward and outward direct investments, at EUR -3 billion, was considerably less substantial than the portfolio investment balance, although it did mask strong underlying flows. Outward direct investment (almost EUR 15 billion) touched a three-year high, whereas one has to look back to early 2012 to see inward direct investment figures like the current EUR 12 billion. A fair share of the inward flows is accounted for by capital investments, which seems to confirm the image of a reviving mergers and acquisitions market.