Taiwan’s balance of payments last quarter recorded a current account surplus of US$26.1 billion, as exports remained strong, even though export growth slowed from a year earlier due to increased raw material prices and capital equipment imports, the central bank said on Friday.
The balance of payments sums all transactions made by individuals, companies and government bodies in one country with foreign entities. The figure is commonly used as a reference point for monetary policymaking.
Taiwan’s current account surplus dropped by US$3.47 billion from a year earlier, after the goods trade surplus shrank by US$1.96 billion, the central bank said, adding that the retreat was due mainly to soaring international raw material prices and aggressive purchases of capital equipment by local firms.
Photo: Tyrone Siu, Reuters
Taiwanese semiconductor makers have accelerated capacity expansion to meet growing demand from customers abroad.
The most recent government data showed that imports of semiconductor equipment reached US$9.2 billion in the third quarter, up US$3.7 billion from a year earlier.
In the first nine months of this year, the current account surplus reached a high of US$81.02 billion, as the Taiwanese economy generated high outbound sales of electronics components and machinery, among others, the central bank said.
Further, the services account surplus rose by about US$590 million year-on-year to US$2.31 billion in the third quarter on the back of a spike in freight proceeds, the central bank said.
Local shipping companies have raked in record profits amid container shortages and port congestions induced in part by global lockdowns to contain the COVID-19 pandemic, it said.
As for financial transactions, fund outflows widened to a record US$27.1 billion last quarter, the 45th consecutive quarterly rise, up from US$18.36 billion a year earlier and up US$1.38 billion from a quarter earlier, the central bank said.
The central bank said the growth came as domestic life insurers increased stakes in bonds and securities overseas, and foreign portfolio managers trimmed holdings in local shares.
Life insurance investments abroad posted a net increase of US$14.74 billion last quarter, while foreign investments in the local market posted a net fall of US$7.95 billion, it said, calling fund outflows “common” for export-oriented economies.
The outflows occur when the local market cannot meet the need of financial institutions, prompting them to convert current account surpluses into foreign currencies and positions in foreign financial assets to generate returns, the central bank said.
Other economies with current account surpluses, such as Germany, Japan, Singapore, South Korea and Thailand, also regularly record fund outflows, it said.
Over the past 45 quarters, net fund outflows totaled US$594.01 billion, which is equivalent to seven years of Taiwan’s tax revenue.
Additional reporting by CNA
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