Macroeconomic scoreboard 2006 - 2013

Macroeconomic scoreboard 2006 - 2013

Periods Current account balance, % of GDP (%) Net international investment position (%) Real effective exchange rate (%) Share of world exports (%) Nominal unit labour costs (%) Deflated house prices (%) Private sector credit flow as a % of GDP (%) Private sector debt as a % of GDP (%) Government debt as a % of GDP (%) Unemployment rate; 3-year average (%) Total financial sector liabilities (%)
2007 7.8 -6.0 -2.1 -2.7 1.8 3.0 9.9 207.8 45.3 4.4 16.3
2008 6.8 4.2 -0.1 -9.4 5.4 0.9 7.5 207.5 58.5 3.7 -0.6
2009 5.4 16.7 2.7 -6.3 10.2 -3.9 6.4 221.2 60.8 3.5 6.1
2010 5.6 24.5 -1.6 -8.5 7.8 -2.9 4.9 221.2 63.4 3.8 7.1
2011 7.2 34.1 -2.5 -8.3 5.8 -4.2 3.2 219.3 65.7 4.2 8.5
2012* 8.7 45.8 -6.0 -12.0 3.3 -8.7 0.2 219.3 71.3 4.7 4.9
2013 1st quarter* 9.1 51.8 -5.0 -11.8 4.2 -9.4 1.0 220.0 72.0 4.9 1.8
2013 2nd quarter* 9.4 50.0 -3.2 -11.3 5.4 -10.1 -0.8 219.6 73.9 5.0 -0.2
2013 3rd quarter* 9.6 49.8 -1.2 -9.9 6.0 -8.8 -0.8 218.6 73.6 5.3 -2.7
2013 4th quarter* 9.7 53.0 . -9.3 6.0 -7.8 1.7 218.6 73.5 5.5 -4.8
Source: CBS.
Explanation of symbols

Table description


To identify in a timely manner existing and potential imbalances and possible macroeconomic risks within the countries of the European Union in an early stage, the European Commission has drawn up a scoreboard with eleven indicators. This scoreboard is part of the Macroeconomic Imbalance Procedure (MIP). This table contains quarterly and annual figures for these eleven indicators for the Netherlands.

Data available from 2006 to 2013.

Status of the figures:
Annual and quarterly data are provisional. Because this table is discontinued, figures will not be updated anymore.

Changes as of July 10th 2014:
None, this table is discontinued.

When will new figures be published?
Not applicable anymore.
This table is replaced by table Macroeconomic scoreboard. See paragraph 3.

Description topics

Current account balance, % of GDP
Current account balance, % of gross domestic product (GDP), three-year moving average.

The current account balance is made up of three parts:

- The trade balance: value of exports of goods and services minus value of imports of goods and services;
- Balance on income: primary income received from the rest of the world minus primary income paid to the rest of the world. Primary income consists of compensation of employees, taxes and subsidies on production and imports, and property income;
- Net current transfers: current transfers received from the rest of the world minus current transfers paid to the rest of the world. Current transfers are dividend tax, social security premiums and benefits and other current transfers.

Sources:
The current account balance is based on the balance of payments as set by the De Nederlandsche Bank (DNB). The GDP is compiled by Statistics Netherlands (CBS) on the basis of its available sources.

Calculation of the scoreboard indicator:
First, the current account balance is calculated as a percentage of GDP. Subsequently the three-year moving average of these percentages is calculated.

Interpretation of the indicator:
In most cases, a current account surplus means that an economy has a positive trade balance, i.e. it exports more than it imports. A positive trade balance contributes to economic growth and may be the result of a strong international competitiveness.
Usually, a current account surplus is accompanied by a net capital outflow, which improves the economy’s net international investment position. Conversely, a long-term current account deficit is accompanied by a net capital inflow, which can make the economy vulnerable to foreign investment sentiment.

Upper and lower limits:
For this indicator, the European Commission has set a lower limit of -4 percent and an upper limit of +6 percent.
Net international investment position
Net international investment position, % of gross domestic product (GDP).

The net international investment position is the value of financial assets of Dutch residents abroad minus the value of financial assets of non-residents in the Netherlands.

The net international investment position can be divided into:
- Net direct investment;
- Net portfolio investment;
- Net financial derivatives;
- Net official reserves;
- Net other investment.

Sources:
The net international investment position is based on the balance of payments as compiled by De Nederlandsche Bank (DNB). GDP is compiled by Statistics Netherlands (CBS) on the basis of its available resources.

Calculation of the scoreboard indicator:
The net international investment position is calculated as a percentage of GDP.

Interpretation of the indicator:
If the net international investment position is negative, a country is in debt to the rest of the world. A large negative net international investment position means that a country is sensitive to developments on international capital markets. However, the composition of the assets and debts is critical in this respect. If Dutch equity investors perform worse abroad than foreign equity investors in the Netherlands, the Dutch net international investment position will decrease, but this will not lead to an increase in Dutch vulnerability. If the net international investment position decreases because more money is borrowed abroad, vulnerability will increase, however.

Upper and lower limits:
For this indicator the European Commission has only set a lower limit: -35 percent.
Real effective exchange rate
Real effective exchange rate (42 partners) - % change on three years previously.

The real effective exchange rate is defined as the nominal effective exchange rate adjusted for price developments.

The nominal effective exchange rate is the trade-weighted exchange rate of a currency compared to some other currencies that are important for the economy. For the scoreboard, the effective exchange rate with 42 trading partners is calculated.

Sources:
The real effective exchange rate is based on data and calculations from the European Commission (DG ECFIN) and is published by Eurostat. See Eurostat's website for more information with regard to the calculation of the real effective exchange rate.

Calculation of the scoreboard indicator:
For the scoreboard, the real effective exchange rate for the Netherland with 42 trading partners (source: Eurostat) is taken as a starting point. Subsequently the percentage change on three years previously is calculated.

Interpretation of the indicator:
The real effective exchange rate reflects both relative price developments and the development of the exchange rates. Negative growth may indicate an improvement in price competitiveness, positive growth a deterioration.

Upper and lower limits:
For this indicator the European Commission has set a lower limit of -5 percent and an upper limit of +5 percent for Eurozone countries, and limits of -11 percent and + 11 percent for non-Eurozone countries.
Share of world exports
Share of world exports as a % of world exports - % change on 5 years previously.

The share of world exports is defined as the value of exports of goods and services in the Netherlands as a percentage of the value of world exports. The value of exports of goods and services in the Netherlands is based on the balance of payments as compiled by the Dutch Central Bank (DNB).

Sources:
The value of world exports is based on data from the International Monetary Fund (IMF). IMF data are available only on an annual basis; quarterly data are based on an interpolation using both the world export volume index and the world export price index in dollars from the world trade monitor of the Netherlands Bureau for Economic Policy Analysis and euro-dollar exchange rate figures from the Dutch central bank (DNB).

Calculation of the scoreboard indicator:
Exports of goods and services are calculated as a percentage of world exports. Subsequently, the percentage change is calculated with respect to five years previously.

Interpretation of the indicator:
Exports of goods and services are a source of income for a country. A change in a country’s share in world exports indicates a change in its relative competitiveness on the world market.

Upper and lower limits:
For this indicator, the European Commission has set only a lower limit: - 6 percent.
Nominal unit labour costs
Nominal unit labour costs - % change on three years previously.

Nominal unit labour costs are defined as the ratio between nominal labour costs per employee and labour productivity. Nominal labour costs per employee are nominal labour costs divided by the number of employees. Labour productivity is calculated as the real gross domestic product (GDP volume) divided by the number of persons employed.

Sources:
The data are from Statistics Netherlands’ national accounts.

Calculation of the scoreboard indicator:
Nominal unit labour costs are calculated on the basis of available data: nominal labour costs, gross domestic product (volume), number of employees and number of persons employed. Subsequently, the percentage change compared to three years previously is calculated.

Interpretation of the indicator:
Positive growth means that labour costs are rising faster than labour productivity, which may adversely affect the competitiveness in the long term.

Upper and lower limits:
For this indicator, the European Commission has set only an upper limit: + 9 percent for Eurozone countries and + 12 percent for non-Eurozone countries.
Deflated house prices
Deflated house prices, % change on one year previously.

Deflated house prices are the ratio between the house price index on the one hand and the deflator for household consumption on the other.

The house price index shows the average price development of all own (i.e. non-rental) homes, both existing and newly constructed, which are intended for permanent residence by a private household.

The deflator for household consumption reflects average price developments in consumption expenditure by households (including non-profit institutions serving households). This deflator is similar, but not identical, to the consumer price index (CPI).

Sources:
The house price index is calculated by Statistics Netherlands (CBS). Statistics Netherlands does not yet publish the house price index used here, but does publish a price index of existing residential property on a quarterly basis. See the website of Eurostat for more information about the house price index.

The deflator for household consumption is derived from Statistics Netherlands’ national accounts.

Calculation of the scoreboard indicator:
The house price index is divided by the deflator for household consumption. Subsequently the percentage change with respect to one year previously is calculated.

Interpretation of the indicator:
The indicator compares the development of house prices with the development of the average consumer prices for households. Positive growth means that house prices are rising faster than consumer prices. In time, this may indicate a price bubble in the housing market.

Upper and lower limits:
For this indicator, the European Commission has set only an upper limit: +6 percent.
Private sector credit flow as a % of GDP
Private sector credit flow, % of gross domestic product (GDP).

The private sector credit flow shows by how much debts of households, non-profit institutions and non-financial companies have increased (or decreased), excluding price developments of bonds and money market paper. Debts include only securities (excluding shares and derivatives) and loans, and are consolidated, i.e. debts within the same sector are not included.

Sources:
The data are from Statistics Netherlands’ national accounts.

Calculation of the scoreboard indicator:
The private credit flow is calculated as a percentage of GDP.

Interpretation of the indicator:
A high credit flow to the private sector, consisting of non-financial corporations, households and non-profit institutions serving households, increases the vulnerability of these sectors to developments in the business cycle, interest rates and inflation. Strong price fluctuations in financial and non-financial assets may also have their origin in changes in the private credit flow.

Upper and lower limits:
For this indicator, the European Commission has set only an upper limit: +14 percent.
Private sector debt as a % of GDP
Private sector debt, % of gross domestic product (GDP).

The debt of the private sector includes the total debt of households, non-profit institutions and non-financial corporations. The debts includes only securities (excluding shares and derivatives) and loans, and are consolidated, i.e. debts within the same sector are not included.

Sources:
The data are from Statistics Netherlands’ national accounts.

Calculation of the scoreboard indicator:
Private debt is calculated as a percentage of GDP.

Interpretation of the indicator:
A high debt increases the vulnerability of the private sector to changes in economic conditions, interest rates or inflation. Part of the outstanding debt must be refinanced periodically. Rising interest rates may lead to higher periodic interest payments for borrowers. A worsening economic situation may persuade banks to tighten their conditions with respect to collateral. As a result households may receive lower mortgage loans with potential implications for the developments on the housing market and in the construction sector.

Upper and lower limits:
For this indicator, the European Commission has set only an upper limit: +133 percent.
Government debt as a % of GDP
Government debt, % of gross domestic product (GDP).

The consolidated debt of the general government (valued at the nominal value) excluding other accounts payable and the debt on financial derivatives, expressed as a percentage of GDP. For the general government the public debt is consolidated. This means that transactions between government-units are eliminated.
Due to differences in valuation method the sum of the debt-titles of the public debt (nominal) is not equal to the sum of the debt-titles in the national accounts (market value). The debt consists of the titles: currency, short-term securities, bonds, short-term loans and long-term loans. General government debt (also known as EDP-debt) is one of the components of the Stability and Growth pact. EDP stands for Excessive Deficit Procedure.


Sources:
The data are from Statistics Netherlands’ national accounts.

Calculation of the scoreboard indicator:
Government debt is calculated as a percentage of GDP.

Interpretation of the indicator:
A high government debt reduces the government’s room to manoeuvre, as it has to reserve a large part of it revenues yearly for interest payments and thus may not be able to implement counter-cyclical policies, or provide guarantees to financial institutions in the event of a financial crisis.

Upper and lower limits:
For this indicator, the European Commission has set only an upper limit: +60 percent.
Unemployment rate; 3-year average
Unemployment rate, international definition, %, three-year moving average.

The unemployment rate is defined as the unemployed labour force as a percentage of the total labour force.

The international definition (ILO definition) of unemployment is used here. This includes all persons between 15 and 75 years of age without paid work who are actively looking for work and are also available to start work. The national definition of unemployment for the Netherlands includes persons aged between 15 and 65 years without paid work, or with paid work for less than 12 hours per week, who are actively looking for work for 12 hours or more per week and also available to start work.

Sources:
The data are compiled by the Statistics Netherlands (CBS), which publishes the unemployment rate for the Netherlands monthly, according to both the international and the national definition.

Calculation of the scoreboard indicator:
Based on the monthly unemployment rate, a moving three-year annual average is calculated.

Interpretation of the indicator:
Alongside economic growth and inflation, unemployment is one of the main macroeconomic indicators. A rise in unemployment, other than being a social problem, also means that government expenditure on social benefits increases and tax revenues decline. Furthermore, an increase in unemployment has a negative impact on consumption. A high and persistent unemployment may indicate a lack of adaptability of an economy.

Upper and lower limits:
For this indicator, the European Commission has set only an upper limit: +10 percent.
Total financial sector liabilities
Total financial sector liabilities - % change on one year previously.

This indicator shows the total of all financial liabilities of the financial sector. This includes deposits, loans, bonds, equity, insurance-related. The debt is not consolidated, i.e. debts within the financial sector are included.

Sources:
The data are from Statistics Netherlands’ national accounts.

Calculation of the scoreboard indicator:
The total liabilities of the financial sector are calculated. Subsequently, the annual percentage change is calculated.

Interpretation of the indicator:
The size of the financial sector liabilities is an indicator of the level of exposure to potential financial shocks in the real economy. A change in financial sector liabilities indicates a change in vulnerability to changes in the economy, interest rates or inflation.

Upper and lower limits:
For this indicator, the European Commission has set only an upper limit: +16.5 percent.