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Taiwan records net financial outflow for 21st consecutive quarter

Taiwan records net financial outflow for 21st consecutive quarter

Taipei, Nov. 21 (CNA) Taiwan registered a net outflow in its financial account for the 21st consecutive quarter in the third quarter of this year, further raising concerns about a fund exodus from the country at a time when the U.S. Federal Reserve is likely to launch an interest rate hike later in the year, a move which could prompt more fund outflows.

According to statistics compiled by the local central bank, Taiwan's financial account, which measures the flow of direct investment and portfolio investments, showed a net outflow of US$16.15 billion during the July-September period.

It was the 21st consecutive quarter in which a net outflow was recorded, the longest streak in Taiwan's history. Since the third quarter of the 2010, Taiwan's total net outflow hit US$219.76 billion, an amount equivalent to the cost of building 16 high-speed rail systems or 125 Taipei 101 skyscrapers here.

In the third quarter of this year, portfolio investments recorded a net outflow of US$22.66 billion, hitting a new quarterly high, the central bank data showed. The bank said that the increase in portfolio investments overseas largely resulted from a move by local insurance companies to pour about US$14.13 billion into foreign bonds during the period.

The central bank said that fears over a possible interest rate hike by the Fed, likely in December, also led many foreign investors to move funds out of Taiwan to boost a net outflow in portfolio investments in the three-month period.

However, the central bank said that for an export-oriented economy like Taiwan, which enjoys a surplus in its current account, it is nothing unusual to record a net outflow in its financial account, adding that Japan, South Korea, Singapore, Germany, Malaysia and Russia also reported a net outflow in their financial accounts.

The current account mainly measures a country's merchandise and service exports.

In the third quarter, Taiwan registered a surplus of US$19.67 billion in its current account.

During the same period, Taiwan's exports fell 13.8 percent from a year earlier on the back of a sluggish global economy and continued weakness in international oil prices, while imports decreased 21.4 percent year-on-year, reflecting a fall in agricultural and industrial raw material purchases.

The central bank said that Taiwan's services account surplus for the third quarter dropped US$240 million year on year to US$2.25 billion, mainly because of a decrease in international freight proceeds reported by local companies.

In the third quarter, Taiwan's overall balance of payments recorded a surplus of US$5.69 billion, reflecting an increase in the central bank's reserve assets, the bank said. (By Chiu Po-sheng and Frances Huang)


Updated : 2021-09-25 05:13 GMT+08:00