Tue, Aug 21, 2012 - Page 13 News List

BOP surplus cut by financial account’s ongoing net outflow

By Amy Su  /  Staff reporter

The nation posted a balance of payments (BOP) surplus of US$3.11 billion in the second quarter, down from the US$4.9 billion posted during the same period last year due to the continuous net outflow of the financial account, the central bank said yesterday.

The balance of payments — including current, financial and capital accounts — summarizes a net amount of money paid or received by a country in a certain period.

The BOP surplus in the April-to-June period fell 36.53 percent from the second quarter last year, the central bank said in a report.

The rising net outflow of the financial account was the major factor dragging down Taiwan’s BOP surplus in the second quarter.

The financial account recorded a net outflow of US$6.99 billion in the second quarter, the eighth consecutive quarter that it has posted a net outflow — the longest period since the global financial crisis, the report’s data showed. It previously registered a net outflow for 10 quarters in a row between 2005 and 2007.

Direct investment showed a net outflow of US$1.97 billion, while portfolio investment registered a net outflow of US$13.53 billion mainly due to shrinking domestic stock holdings by foreign investors, the report said.

However, the banking sector decreased short-term foreign lending and loans to overseas affiliates in the second quarter, which partially offset the significant net outflow in portfolio investment, it said.

The continuous net outflow of the financial account has raised some concerns about the nation’s investment environment.

However, Lin Shu-hua (林淑華), deputy chief of the central bank’s economic research department, said it is too arbitrary to evaluate Taiwan’s investment environment using a single indicator.

“Investment capital always shows a trend of flowing two ways [in the long run],” Lin told a press conference.

The current account surplus totaled US$10 billion in the second quarter, up from US$8.39 billion during the same period last year amid larger surpluses in services and income accounts, as well as a smaller current transfer deficit, the bank said.

However, the decline in exports exceeded that of imports during the April-to-June period, narrowing the goods trade surplus to US$5.62 billion, data showed.

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