The nation’s balance of payments last quarter recorded a current account surplus of US$23.39 billion, down US$8.84 billion from a year earlier, as trade surpluses declined after exports slid into contraction mode, the central bank said on Monday.
A global economic slowdown induced by high inflation and drastic monetary tightening played a significant role in the lackluster performance, the bank said.
Exports in the fourth quarter of last year shrank 8.6 percent from a year earlier, with the retreat in shipments to China being most evident, Ministry of Finance data showed.
Photo: Billy H.C. Kwok, Bloomberg
The balance of payments refers to the sum of all transactions with foreign entities by individuals, companies and government bodies. It is commonly used as a reference point for monetary policymaking.
Taiwanese exporters, which reaped a windfall during the COVID-19 pandemic, are now struggling with inventory corrections, as consumers worldwide cut spending on technology products. Taiwan is home to the world’s largest suppliers of electronics used in smartphones, notebook computers, wearables and TVs, among other applications.
The services account surplus narrowed by US$2.87 billion to US$1.13 billion, as sluggish demand for shipping services weighed on freight rates, the central bank said.
The financial account recorded a US$15.66 billion net capital outflow as local insurers raised their holdings of overseas assets and foreign portfolio managers increased their holdings of local shares, the central bank said.
It was the 50th consecutive quarter of net capital outflows.
It is common for export-focused nations such as Taiwan, China, South Korea and Germany to report fund outflows, as financial institutions pursue investment returns in markets around the world, the central bank said.
The fund movements occurred as local firms increased their investments in overseas markets to expand their footprint, while foreign companies deepened their presence in Taiwan, especially in the areas of green energy, wholesale and retail, and finance, the central bank said.
The balance of payments last year recorded a current account surplus of US$101.73 billion and the financial account registered an asset increase of US$98.1 billion, it said.
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