The current-account surplus in the second quarter grew 2.8 percent from the same period last year to US$17.82 billion, aided by strong exports on the back of a stable global economy, the central bank said yesterday as it presented the balance of payments.
The financial account recorded capital outflows for the 32nd consecutive quarter as foreign portfolio managers slashed holdings in local shares, while domestic life insurers bought more foreign debt in pursuit of better yields, the central bank said.
“Capital outflows are common in countries with trade surpluses, which drive financial institutions to park surplus liquidity abroad when investment opportunities at home are limited,” the central bank said in a statement.
The balance of payments summarized transactions with the rest of the world from April to June, covering movements of goods, services and income by residents and non-residents.
The goods trade surplus widened by US$1.91 billion to US$19.41 billion last quarter on the back of robust demand for electronic parts and components used in new technology applications, the bank said.
Taiwan is home to the world’s largest contract chipmakers, with semiconductor sales accounting for 25 percent of overall outbound shipments, official data showed.
Higher-than-expected exports led the Directorate-General of Budget, Accounting and Statistics to raise its GDP growth forecast for the full year from 2.6 percent to 2.69 percent, despite uncertainty due to the US-China trade dispute.
The financial account, which captures fund movements by financial institutions, showed overseas portfolio investment by residents climbing US$15.39 billion, mainly because local insurance companies bought more securities abroad, the bank said.
Foreign portfolio managers cut holdings in local shares by US$6.49 billion, which is consistent with capital flows from emerging markets to advanced economies — especially the US — where yields are higher following a series of interest rate hikes, the bank said.
The US Federal Reserve is widely expected to raise interest rates at least once more this year.
In the first two quarters of the year, the current-account registered a surplus of US$37.17 billion, while the financial account showed net asset growth of US$28.32 billion, it said.
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