Preliminary results show that the level of the Dutch Gross National Income in 2011 and 2012 were higher than previously calculated: 1.8 and 1.5 percent respectively. Newly released information about the sizable international financial flows of multinationals has contributed tothis raised estimate. This is shown by the preliminary results of research by Statistics Netherlands and De Nederlandsche Bank (DNB) that started at the end of 2014 in order to create a better match between the national accounts and the balance of payments. Various corrections in the calculation method have been incorporated. The level of the gross domestic product(GDP) of 2012 turns out tobe 0.7 percent higher than earlier calculations showed. The 2011 GDP remains unchanged.
Adjustments of GDP and GNI are part of the regular procedure at Statistics Netherlands. New calculations are made each year on the basis of the most recently available data and information about developments in the Dutch economy concerning the previous years. The study into reporting years 2013 and 2014 is ongoing, but the GNI for these years may well have to be upwardly adjusted. A consultation with Eurostat is being held within the framework of this study, about the correct interpretation of the current international guidelines for the compilation of the national accounts. The definite results on all four reporting years will be published on 24 June 2015.
International financial flows by Dutch companies exert a major influence on GNI developments
Gross National Income consists of the sum of GDP and the balance of the primary income flows with the rest of the world. The balance tends to be positive for the Netherlands, although occasionally it can turn out negative. Primary income includes interest, dividend and profits among other things.The Netherlands is a small open economy with a relatively large financial sector and a great deal of international activity. This is why the income flows between the Netherlands and the rest of the world are sizeable. Moreover their size has increased in recent years. The profit flows of multinational enterprises are increasingly going abroad via Dutch financial holdings. The total income flows between countries have become more detailed and complex. Because the incoming and outgoing primary income flows of the Netherlands are substantial – between 180 and 240 billion euros a year – relatively small percentage changes in the flows lead to large changes in the primary income balance and therefore in the Gross National Income. This also explains the rather large adjustment of the Gross National Income in comparison to the GDP adjustment and why the uncertainty margins in determining the Gross National Income are larger than those for GDP.
Statistics Netherlands and DNB are harmonising their macro-economic statistics
Statistics Netherlands and DNB traditionally base their description of international profit flows on their own sources, international guidelines and methods. Some of these sources have been co-ordinated and exchanged in recent years, but the differences had remained substantial. Last yearStatistics Netherlands implemented the revision of the international guidelines for the compilation of the national accounts and the DNB did so for its balance of payments, resulting in a complete match in methodology. By the end of 2014, Statistics Netherlands and DNB were able to harmonise their figures and end the major differences between them. This step is especially relevant because the international finance flows are more and more interwoven, which means that measuring the Dutch international relations requires more and more information and know-how.
A critical look at all available information and calculation methods
At the end of 2014 Statistics Netherlands and DNB have started to compare, analyse and coordinate all available information about the financial flows of and between multinationals as part of this study. Whenever necessary the enterprises are contacted and their reported micro-data and in-house processing scrutinised. The study is limited to the reporting years 2011-2014 because the differences in earlier years were limited. The first results of the analysis have led to the implementation of several corrections in the calculation method of Statistics Netherlands, which relate to the incomplete processing of the source information and corrections in the application of the current international bookkeeping regulations for compiling the national accounts.
Eurostat is being consulted about the correct interpretation of the current guidelines from the international framework of the European System of Account (ESA 2010) for compiling the national accounts. Specifically about the international bookkeeping changes involving retained profits obtained by the parent companies abroad.
Adjustments of international flows and regular GDP recalculations
Apart from the harmonisation of the primary income flows Statistics Netherlandsannually adjusts the GDP of the previous three years. This is the regular procedure in which the latest available information about production and expenditure is included. For 2012 it means that GDP is up by 0.7 percent. The recalculation also shows that Dutch economic growth in 2012 was less negative than published earlier. The Dutch economy did not contract by 1.6 but by 1.1 percent. This upward adjustment is mainly due to new information about the wholesale and retail trade, which shows that the sector performed better that assumed. The combined effect of the higher balance of the primary incomes and the higher GDP means that the level of Gross National Income in 2012 according to the preliminary results will be 1.5 percent higher than in the previous calculation. There is no change in the GDP of 2011. The higher level of the Gross National Income for 2011 of 1.8 percent is entirely due to the adjusted international financial flows.
Effect on GDP and Gross National Income for reporting years 2013 and 2014
The readjusted GDP figure for 2012 has a direct effect on the calculations for the years 2013 and 2014 that still have to be published, because the larger size of the economy in 2012 has an impact on the GDP and therefore the Gross National Income for these years. In the next period, the national accounts for reporting years 2013 and 2014 will be calculated according to the regular update policy incorporating all currently available information about the developments of the Dutch economy plus the data that will be arriving. The first results of the study by Statistics Netherlands-DNB show that the balances of the primary incomes for 2013 and 2014 reported earlier will likewise have to be adjusted upward. It is conceivable that changes may have to be implemented for 2011 and 2012 because of the current study. Statistics Netherlands will include the definite results in the regular national accounts publication on its scheduled date of 24 June 2015.
According to the publication policy by Statistics Netherlands, the Ministry of Finance and the Ministry of Economic Affairs have been duly informed prior to publication.