De Nederlandsche Bank publishes experimental current account measure that lowers the 2021-2023 surplus to 7.5% of GDP

De Nederlandsche Bank (DNB) has published an analysis using a broader definition of investment income to calculate an experimental, alternative measure of the Dutch current account balance. On this basis, the average current account surplus for 2021-2023 falls to 7.5% of gross domestic product (GDP) from 8.8% under the official definition, although it remains above the European Commission’s 6% of GDP threshold used in the Macroeconomic Imbalance Procedure (measured over a three-year average). The alternative approach reflects recent International Monetary Fund (IMF) guidance to show the impact of attributing all corporate earnings to investors, including undistributed earnings retained and reinvested by companies, rather than counting only paid dividends for equity investments. DNB notes this is particularly relevant for the Netherlands given the large presence of listed multinationals with mainly foreign investors and the significant foreign investment activities of Dutch pension funds and insurers. Under the alternative measure, both income allocated to foreign investors from Dutch companies and income received by Dutch investors from abroad are higher, typically offsetting each other, but the 2021-2023 gap is mainly linked to higher earnings and lower dividend payments by Dutch multinationals; in years before 2021, the alternative measure is on average slightly higher than the official measure.