Retained earnings and the current account

To compile the alternative measure, we combine granular information on securities held and issued internationally with company-level profit figures for the time period 2013-2023. The alternative measure records substantial additional income flows compared to the official definitions. This finding is in line with expectations, given the relatively large international assets and liabilities of the Dutch economy.

Our analysis shows that the definition of income used can have a substantial effect on the balance of the Dutch current account. The presented alternative measure provides insights to policymakers with respect to the underlying factors driving the Dutch current account surplus. It also presents an additional reason why the Netherlands has been building up less external assets since 2021 than would be expected based the official measure of the current account.