Netherlands has the seventh largest trade surplus in the world

Worldwide, the Netherlands has the seventh largest trade surplus in the trade of goods, according to figures released by Statistics Netherlands today. A country has a trade surplus when it exports more goods for more money than it imports. The reverse is called a trade deficit.

Three EU countries facing the largest trade deficits

China and Germany have the largest trade surpluses in the world in the absolute sense. The United States have by far the largest trade deficit in the goods trade. In 2014 the deficit reached nearly 800 billion dollars, more than the surpluses of China and Germany put together. Nearly 50 percent of the deficit of the USA comes from the trade with China. The Netherlands, with 85.6 billion dollars has the second largest trade surplus of the European Union, after Germany, and the seventh largest in the world. Including the transition trade flows, the Netherlands exported 672.4 billion dollars worth and imported for 586.8 billion dollars in 2014. Three EU countries are ranked with the largest trade deficits in dollars: France (5), Spain (9) and Greece (11).

In comparison with the national GDP of each country the German trade surpluss (8 percent of GDP) and China (4 percent) are smaller than the Dutch trade surpluss (10 percent). In this relative ranking, the Netherlands occupies the 25th position in the world. The Greek deficit (12 percent) as a percentage of GDP is considerable larger than that of the USA (5 percent), France (3 percent) or Spain (2 percent).

Largest global trade surpluses and deficits, trade in goods including transit trade, 2014

Limited Dutch share in the Greek trade deficit

The Netherlands has a trade surplus in the goods trade with France, Spain and Greece. The Dutch share in the total trade deficit of France is 28.8 percent, in the case of Spain it is 20.4 and of Greece it  is 9.5 percent. However, a great deal of this concerns re-exports and transit flows through the Dutch territory, in Dutch imports and exports. For example, this concerns Chinese computers sold by the Netherlands to France or French wine exported by the Netherlands to the USA.

After adjustment for these transit flows, a more economically relevant picture about the Dutch share emerges. The Dutch share decreases substantially in the deficits of France, Spain and  Greece; for Greece it is down to 6.5 percent. This adjustment may be slightly on the large side, as it does not include any transit flows between Greece and other countries. The economically relevant share of the Netherlands in the Greek deficit would then be slightly higher than 6.5 percent.

Dutch share in trade deficits France, Spain and Greece, 2014

Trade surpluses often signify competitive strength

The trade balance is particularly suitable for gaining insight into the competitive power of a given country. A trade surplus often means that a country is competitive in the production of goods on the world market. This can be with a relatively low price and a relatively high quality. The supply of natural resources can also play a role in the creation of trade surpluses, such as in the case of crude oil.

An increase in the trade surplus can sometimes indicate a lacklustre demand in domestic consumption compared to GDP growth. The European Commission periodically monitors the trade balances of the EU as a percentage of GDP because large surpluses or deficits may lead to macro-economic inbalances.

To provide an accurate picture of the importance of the exports of goods for the Netherlands we need to look at the value added of the exports, or the contribution exports make to GDP. The trade balance is based on measuring turnover values, whereas economic prosperity is determined by the value added. The trade surplus as a percentage of GDP grew slightly faster in the period 2010-2013 than the contribution of exports to GDP. The former grew by 6.9 percent in 2010 reaching 9.6 percent in 2013 and the other saw a slight increase from 19.5 percent to 21.5 percent of GDP.

Contribution export of goods to GDP versus trade balance of goods as % of GDP