Balance of payments surplus rose in Q3

By Crystal Hsu  /  Staff reporter

Wed, Nov 21, 2012 - Page 13

The balance of payments (BOP) surplus rose to US$3.7 billion last quarter, from US$3.11 billion three months earlier, as imports declined faster than exports and capital flight intensified, the central bank said yesterday.

The latest BOP figures — including current, financial and capital accounts — detailed money Taiwan paid or received during the July-to-September period as a result of goods and services flows.

The current account, a critical gauge of Taiwan’s export-oriented economy, saw its surplus widen to US$8.42 billion last quarter, up 13.5 percent from the same period, the central bank’s quarterly report showed.

“While exports contracted 2.2 percent year-on-year, imports dropped a bigger 3.4 percent, boosting the current account surplus by US$680 million,” Lin Shu-hua (林淑華), deputy chief of the central bank’s economic research department, told a press conference.

Slower imports may not be a good sign for the economy because raw material imports are critical to the production of goods for exports, Lin said.

The financial account recorded a net outflow of US$8.15 billion last quarter, from a revised US$7.76 billion in the second quarter, the ninth consecutive quarter and second-longest period of capital flight since the global financial crisis, the report said.

Portfolio investment by Taiwanese registered a record outflow of US$17.21 billion last quarter, as life insurance companies increased stakes overseas in light of limited investment options at home, Lin said.

“The trend is likely to persist unless the local market can offer more investment products and services,” Lin said.

However, life insurers will have more difficulty parking idle funds in Taiwan after the Financial Supervisory Commission on Monday raised minimum yields on real-estate investments from 2.125 percent to 2.875 percent, in a bid to curb commercial property price hikes.

Foreigners also cut investments, chiefly in government bonds, with their portfolio registering a net outflow of US$110 million in the third quarter, Lin said.

Fund outflows may extend sluggish trading in the local bourse with major players sidelined, Lin said.