Taiwan’s current account surplus dropped to its lowest in five quarters in the second quarter of this year, as imports of semiconductor equipment, mineral products and COVID-19 prevention items increased sharply, the central bank reported on Friday.
Data compiled by the central bank showed that the surplus in the nation’s current account, which mainly measures exports and imports of goods and services, fell US$2.99 billion from a year earlier to US$26.55 billion, the lowest level since the first quarter of last year, when the current account surplus was US$25.96 billion.
A current account surplus occurs when exports exceed imports.
Photo: CNA
The central bank said local chipmakers have been keen to expand production in the past year, and imports of semiconductor equipment reached the third-highest-ever quarterly figure of US$8.8 billion in the second quarter, trailing only the US$9.2 billion recorded in the third quarter of last year and the US$9 billion recorded in the fourth quarter of last year.
The central bank said Taiwan’s mineral product imports totaled US$21.5 billion, with imports of crude oil up US$3.5 billion from a year earlier, purchases of coal up US$2.4 billion and imports of liquefied natural gas up US$2 billion, while COVID-19 prevention device imports rose US$1.8 billion to US$3.6 billion.
During the April-to-June period, Taiwan’s merchandise trade recorded a surplus of US$17.79 billion, down US$6.08 billion from a year earlier, while its service trade reported a surplus of US$3.73 billion, up US$1.35 billion from a year earlier largely due to an increase in income from the shipping industry, the central bank said.
In the second quarter, Taiwan continued to report net fund outflows totaling US$24.36 billion in its financial account, which measures the flow of direct investment and portfolio investment, marking the 48th consecutive quarter of outflows.
The net fund outflow was mainly due to portfolio investments abroad posting a net asset increase of US$26.62 billion with a net increase of US$13.65 billion in Taiwan residents’ portfolio investments abroad as insurance companies increased their investment in debt securities, the central bank said.
On the other hand, nonresidents’ portfolio investments recorded a net decline of US$12.97 billion in the second quarter as foreign institutional investors reduced their holdings in Taiwanese stocks, the central bank added.
Over the past 48 quarters, Taiwan’s aggregate net fund outflows totaled US$684.39 billion, equivalent to the country’s tax revenue over eight years, central bank data showed.
Addressing concerns that investors will keep moving funds out of the country and into US dollar-denominated assets, the central bank said net financial account outflows are common in countries that have a long-term current account surplus.
Other such countries, including Japan, Singapore, South Korea and Germany, also tend to record net financial account outflows, the central bank said.
In the first half of this year, Taiwan’s net financial account outflow totaled US$56.29 billion, while the current account surplus was US$56.8 billion.
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