Tue, May 21, 2019 - Page 12 News List

Taiwan’s current-account surplus shrinks 23 percent

By Crystal Hsu  /  Staff reporter

Taiwan’s current-account surplus shrank 23 percent year-on-year to US$17.09 billion in the first quarter as exports weakened amid a global slowdown, the central bank said yesterday.

Uncertainty built up after Washington on May 10 added to tariffs on Chinese goods and Beijing retaliated.

The balance of payments summarizes the nation’s transactions with the rest of the world in the first three months of the year, covering movements of goods, services and income by residents and non-residents.

Exports declined by US$6.9 billion, while imports fell by US$2.8 billion as global demand for technology products fell.

Taiwan is home to the world’s largest suppliers of electronic components used in smartphones and laptops.

Although major technology firms said they could emerge from inventory adjustments this quarter, the situation might worsen if the US makes good on threats to extend punitive tariffs next month to consumer electronics.

The financial account, which captures fund movements by financial institutions, saw a net capital outflow for the 35th consecutive quarter, as local mutual funds and insurance companies increased holdings in foreign securities by US$15.7 billion, the bank said.

Capital outflows are common in economies with trade surpluses, as financial institutions park surplus liquidity in overseas markets to bring higher yields, the bank said.

Foreign portfolio managers added US$2.93 billion of local shares last quarter, helping the TAIEX rise above the 10,000-point mark, the bank said.

However, foreign institutional investors since May 10 have become net sellers on the local bourse, which has helped drag the New Taiwan dollar down by 1.4 percent, Taiwan Stock Exchange data showed.

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