Taiwan’s current account surplus fell to its lowest in five quarters in the second quarter of this year as imports of semiconductor equipment, mineral products and COVID-19 preventive items increased sharply, according to the central bank.
Data compiled by the central bank showed the surplus in the country’s current account, which mainly measures the exports and imports of a country’s goods and services, fell by US$2.99 billion from a year earlier to US$26.55 billion in the second quarter, the lowest level since the first quarter of 2021, when the figure stood at US$25.96 billion. A current account surplus occurs when exports exceed imports, whereas the opposite results in a deficit.
The central bank said as the local semiconductor industry has been keen to expand production in the past year, imports of production equipment reached the third-highest quarterly value of US$8.8 billion in the second quarter, trailing only the US$9.2 billion in the third quarter of last year, and US$9 billion in the fourth quarter of 2021.
The central bank added that Taiwan’s mineral product imports totaled US$21.5 billion with imports of crude oil up by US$3.5 billion from a year earlier, purchases of coal up by US$2.4 billion year-on-year, and imports of liquefied natural gas up by US$2 billion year-on-year, while the country’s COVID-19 preventive device imports rose by US$1.8 billion from a year earlier to US$3.6 billion.
During the April-June period, Taiwan’s merchandise trade recorded a surplus of US$17.79 billion, down by US$6.08 billion from a year earlier, while its service trade reported a surplus of US$3.73 billion, up by 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 a net fund outflow of US$24.36 billion in its financial account, which measures the flow of direct investment and portfolio investment, marking the 48th consecutive quarter of a net fund outflow.
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 residents’ portfolio investment abroad as insurance companies increased their investment in debt securities, the central bank said.
On the other hand, non-residents’ portfolio investment recorded a net fall 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 outflow totaled US$684.39 billion or almost NT$2 trillion, which was equivalent to the country’s tax revenue over eight years, the central bank’s data showed.
Addressing concerns that investors will keep moving funds out of the country and into U.S. dollar-denominated assets, the central bank said net financial account outflows were common in countries like Taiwan that have a long-term current account surplus.
Other countries, including Japan, Singapore, South Korea and Germany, which have all enjoyed a long-term current account surplus, 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 with the current account surplus at US$56.8 billion.
Source: Focus Taiwan News Channel