Central Bank of the Republic of China (Taiwan)
PRESS RELEASE Release Date: February 20, 2009

BALANCE OF PAYMENTS

For the fourth quarter of 2008, the current account posted a surplus of US$7.92 billion and the financial account showed a net inflow of US$2.50 billion. The overall balance of payments registered a surplus of US$12.96 billion, reflecting an increase in the Bank's reserve assets.

In terms of the current account, due to the sharp decline in external demand induced by a global economic recession, exports shrank by 24.9% in value from the same period of the previous year; imports also fell by 22.3% year on year owing to lower crude oil prices and export derived demand. As exports showed a larger decrease than imports, goods trade surplus narrowed by US$4.05 billion, or 39.1%, compared to the same period of the previous year, to US$6.32 billion. The services account turned to a surplus of US$0.26 billion, mostly induced by a decrease in both travel expenses and freight payments for imports. The income account surplus dropped by US$0.28 billion from the same period last year to US$2.05 billion, primarily attributable to thinner direct investment income of residents as well as reduced investment income from foreign exchange assets due to interest rate cuts by major industrialized countries. The current transfer deficit went down by US$0.27 billion from the same period last year to US$0.71 billion, mainly caused by a decrease in outward remittances to family members overseas. In summary, the services account surplus and the narrowing current transfer deficit were offset by a greater contraction in goods trade and income account surpluses, leading the current account surplus to drop by US$3.26 billion, or 29.2%, over the same period last year.

With regard to the financial account, direct and portfolio investment showed respective net inflows of US$0.40 billion and US$6.79 billion. Residents' portfolio investment abroad posted a record quarterly net inflow of US$13.04 billion, as residents redeemed their investment in foreign financial products for a second consecutive quarter amid the global financial turmoil. Driven mainly by the offloading of local stocks and bonds among foreign institutional investors, non-residents' portfolio investment registered a net outflow of US$6.25 billion, which, nevertheless, narrowed by 60% from the outflow of the previous quarter. Other investment exhibited a net outflow of US$5.39 billion, as the banking sector increased deposits with and repayments to their overseas affiliates in response to the liquidity shortage overseas.

For the year of 2008 as a whole, the current account showed a surplus of US$25.02 billion, the financial account posted a net outflow of US$1.78 billion, and the overall balance registered a surplus of US$26.27 billion, reflecting an increase in the Bank's reserve assets.

Notes: 1. The next balance of payments data will be released at 16:20 p.m. on May 20, 2009.
2. For the release schedule for the next six months, please check the CBC website at http://www.cbc.gov.tw/lp.asp?ctNode=515&CtUnit=227&BaseDSD=7&mp=2.