The nation’s financial account saw net fund outflows for the twentieth consecutive quarter during the April-June period with the first tourism deficit in recent years as the global slowdown sapped travel spending among foreign tourists, the central bank said yesterday.
The bank suggested the government help local firms IMPROVE exports to Southeast Asian markets to take advantage of their relatively fast GDP growth and cut dependence on China.
The overall balance of payments (BOP) — which includes the current, financial and capital accounts to capture money paid or received by the nation for trade goods and services — posted a US$4.17 billion surplus last quarter, rising 9 percent from three months earlier, Economic Research Department Deputy Director Lin Shu-hua (林淑華) said.
Lin attributed the increase to trade surpluses last quarter, when exports contracted 9.7 percent, but imports slumped 15.2 percent.
As a result, current accounts registered a US$16.55 billion surplus last quarter, falling 54.6 percent from the revised US$22.01 billion in the first quarter, the central bank report said, as the slowdown in external demand grew.
On the financial side, local insurance companies increased holdings in foreign currency-based assets last quarter as they generated higher yields, keeping the financial account in the negative zone for 20 quarters running with a deficit of US$15.3 billion, Lin said.
“It is commonplace for countries with trade surpluses to see financial account deficits to ease local currency appreciation and inflationary pressures,” Lin said, adding that a lack of investment tools at home helped drive funds abroad.
The deficit may widen as foreign investors cut positions in local shares to reflect the nation’s poor economic showing and the expectation of interest rate hikes by the US Federal Reserve may facilitate the fund flight.
Tourism balances, which helped boost service income in recent years, logged a deficit of US$500 million last quarter, the first since 2011 when Taiwan opened its market to Chinese tourists, Lin said.
The economic deceleration in China likely accounted for more conservative spending, Lin said, adding that the sentiment is also seen among tourists from other countries.
Foreign tourists spent an average of US$215.01 per day in Taiwan last quarter, down 5.8 percent from a year earlier, the central bank said.
Tourism authorities have said they would relax travel requirements to attract more foreign tourists, especially from China, as part of the government’s effort to boost the economy.
The central bank said it has kept a loose monetary policy to encourage business activity and recently eased mortgage restrictions for some districts in Taoyuan and New Taipei City.
It advised the government to help firms diversify export markets and cut heavy dependence on China.
The central bank called for more emphasis on ASEAN markets, the second-largest destination for Taiwanese exports.
Exports to the region declined 11.7 percent for the first seven months, suggesting ample room for improvement, the central bank said.
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