Central Bank of China

PRESS RELEASE Release Date: May 20, 2003




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BALANCE OF PAYMENTS

For the first quarter of the year 2003, the current account registered a surplus of US$7,244 million, and the net outflow of financial account amounted to US$1,297 million while reserves increased by US$5,901 million.

In terms of the current account, both export and import gained momentum. Export grew 11.5% year on year mainly driven by exports to Asian markets, such as Hong Kong, mainland China and South Korea, while import expanded 20.6% led by surging export and the steady recovery of the domestic economy, as well as increasing demand for oil under the worries of the U.S.-Iraq war. The surplus in trade balance reached US$5,260 million for the quarter. Services deficit was US$709 million, hitting the lowest quarterly figure on record, mainly due to an increase in net merchanting trade. Income surplus amounted to US$3,285 million, the highest figure for a single quarter, mainly because of an increase in investment income on the CBC's foreign exchange reserves. Current transfers deficit was US$592 million. In total, the current account registered a surplus of US$7,244 million.

In regard to the financial account, direct investment and portfolio investment posted outflows of US$842 million and US$6,113 million, respectively, while other investment exhibited a net inflow of US$5,658 million.

Among the components of the financial account, direct investment registered an outflow of US$842 million, with direct investment in Taiwan by non-residents remained sluggish year on year but direct investment abroad by residents increasing by 20.5%. Portfolio investment posted an outflow of US$6,113 million. Of this amount, residents' portfolio investment abroad recorded a net outflow of US$8,093 million, hitting the highest quarterly outflow, with investment in debt securities doubled, mainly prompted by life insurance companies' investment in foreign bonds. Nevertheless, non-residents' portfolio investment in the local market continued showing a net inflow of US$1,980 million. Other investment recorded a net inflow of US$5,658 million. Of this amount, the banking sector accounted for an inflow of US$4,109 as deposits from off-shore increased.

Notes: 1. The upcoming balance of payments data are to be released at 16:10 on August 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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