Central Bank of China

PRESS RELEASE Release Date: February 20, 2003




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BALANCE OF PAYMENTS

For the fourth quarter of the year 2002, balance of payments exhibited a surplus. The surplus of the current account reached US$7,718 million, and the net outflow of financial capital amounted to US$4,572 million while reserves increased by US$2,269 million.

In terms of the current account, both export and import gained momentum. Export grew 10.1% year on year, mainly driven by exports to East Asian markets, such as Hong Kong, Mainland China and South Korea, while import expanded 11.6% led by surging export and the steady recovery of the domestic economy. Due to a greater increase in exports than in imports, the surplus in trade balance reached US$7,431 million, hitting the highest quarterly figure on record. Services deficit was US$960 million. Income surplus amounted to US$1,859 million, mainly because of the increase in the investment income on the CBC's foreign exchange reserves and in the dividends of residents' direct investment abroad. Current transfers deficit was US$612 million. In total, the current account registered a surplus of US$7,718 million, showing an increase of 14.5% from the same period last year.

The financial account posted a net outflow of US$4,572 million for the quarter, with direct investment, portfolio investment and other investment exhibiting net outflows of US$1,008 million, US$2,441 million and US$1,123 million, respectively.

Among the components of the financial account, direct investment abroad by residents increased significantly by 47.3% year on year to US$1,664 million, while direct investment in Taiwan by non-residents shrank slightly by 4.1% to US$656 million. Of portfolio investment, residents' portfolio investment abroad recorded a net outflow of US$3,798 million with more investment in equity securities than in debt securities. Non-residents' portfolio investment in the local market showed a net inflow of US$1,357 million, largely due to an increase in local stock holding by foreign investors.

Other investment recorded a net outflow of US$1,123 million, largely because a stronger US dollar triggered expectations of NT dollar depreciation. Under the influence, foreign currency deposits continued increasing, which caused local banks to redeposit their deposits in and make loans to foreign financial institutions, which in turn caused the net foreign asset of the banking sector to rise by US$5,724 million.

For the year 2002 as a whole, the current account surplus accumulated to US$25,730 million, and the financial account posted a net inflow of US$8,386 million with reserves rising by US$33,664 million. Both the current account surplus and the increase in the reserves assets reached the highest yearly figure on record.

Notes: 1. The upcoming balance of payments data are to be released at 16:20 on May 20, 2003.

2. For the release schedule for the next six months, check the CBC website at http://www.cbc.gov.tw/account/index.html.

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