Taiwan's balance of payments likely to post surplus
CNATAIPEI--Taiwan is likely to post a surplus in its balance of payments in the second half of the year because of peaking exports during the period, analysts said Wednesday.
August 22, 2013, 12:04 am TWN
They said a recovery in exports in the last six months of 2013 would strengthen Taiwan's current account surplus and help offset financial outflows to keep the country's balance of payments positive.
The balance of payments is comprised of three categories, including the current account, which largely measures merchandise and service transactions, and the financial account, which reflects flows in direct investments and portfolio investments.
The third category is the capital account, which comprises capital transfers and acquisitions/disposals of non-produced, non-financial assets, such as patents and goodwill. The capital account has only a minor effect on the balance of payments because of the relatively limited amounts it involves. Yuanta-Polaris Research Institute President Liang Kuo-yuan said that although the pace of Taiwan's economic recovery remains slow, growing global demand in the second half should help Taiwan run a trade surplus. Liang said that unless global financial conditions turn sour in the second half of the year and erode global demand, Taiwan's balance of payments should continue to run a surplus.
Liang warned, however, that if the U.S. Federal Reserve begins tapering down its US$85-billion-a-month bond buying program later this year, foreign investors may repatriate their funds out of Asia back to their home markets, which would increase the financial account deficit and affect the balance of payments.
Norman Yin, a finance professor of National Chengchi University, agreed, saying that any move by the Fed to tighten its monetary policy would only worsen Taiwan's financial account, which recorded its 12th quarterly deficit in a row in the second quarter.
Yin said it was still too early to say whether Taiwan will continue to record a surplus in its balance of payments in the second half of the year as uncertainty remains over global demand for electronics devices, which are the backbone of Taiwan's exports.
According to statistics released by the central bank Tuesday, Taiwan posted a balance of payments surplus of US$6.03 billion in the first half of 2013.
Taiwan's current account registered a surplus of US$24.86 billion while its financial account recorded a net deficit of US$19.07 billion.
The capital account ran a surplus of US$10 million during the period, the statistics showed.
In the second quarter alone, Taiwan's current account recorded a surplus of US$13.8 billion and the capital account registered a surplus of US$30 million, while the financial account suffered a net deficit of US$10.08 billion.