Macroeconomic scoreboard

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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.

Private sector credit flow

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.

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

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 taken into account.

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.

Household sector debt as a % of GDP

The household sector debt includes the total debt of households and non-profit institutions. The debts include only 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:
Household debt is calculated as a percentage of GDP.

Interpretation of the indicator:
A high debt increases the vulnerability of the households 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 deteriorating 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:
The European Commission has set an upper limit for total private sector debt (including non-financial corporations): +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.