Central Bank of China

PRESS RELEASE Release Date: November 20, 2002




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BALANCE OF PAYMENTS

For the third quarter of the year 2002, both the current account and the financial account of the country registered surpluses. The surplus of the current account reached US$4,961 million, and the net inflow of financial capital amounted to US$3,169 million while reserves increased by US$8,982 million.

In terms of the current account, both export and import gained momentum. Export grew 18.9% year on year, mainly driven by exports to Hong Kong, mainland China and South Korea, while import expanded 21.6% led by surging export and the steady recovery of the domestic economy. Goods trade surplus reached US$4,855 million, while services deficit was US$1,255 million. Income surplus amounted to US$2,000 million, the highest surplus ever recorded for a single quarter, mainly because the interest income on the CBC's foreign exchange reserves had increased and the interest payment on local residents' external borrowing had decreased. Current transfers deficit was US$639 million. In total, the current account registered a surplus of US$4,961 million, showing an increase of 17.3% from the same period last year.

The financial account posted a net inflow of US$3,169 million for the quarter, with direct investment and portfolio investment exhibiting net outflows of US$489 million and US$598 million, respectively, and other investment showing a net inflow of US$9,638 million.

Among the components of the financial account, direct investment abroad by residents decreased by 11.6% year on year to US$922 million, while direct investment in Taiwan by non-residents shrank significantly by 58.6% to US$433 million. Of portfolio investment, residents' portfolio investment abroad recorded a net outflow of US$4,016 million, hitting the highest net outflow for a single quarter, mainly because declining domestic interest rates had prompted local residents to invest in foreign securities. Non-residents' portfolio investment in the local market showed a net outflow of US$1,964 million, largely due to a decrease in local stock holding by foreign investors.

Other investment recorded a net inflow of US$9,638 million, as foreign currency deposits continued decreasing, which caused local banks to withdraw their deposits in and loans to foreign financial institutions, which in turn caused the net foreign asset of the banking sector to drop by US$7,655 million.

For the first three quarters of this year, the current account surplus accumulated to US$17,694 million, and the financial account posted a net inflow of US$12,298 million with reserves rising by US$31,395 million.

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