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September 26, 2017

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Country sees net outflow in financial account in Q3

TAIPEI--Taiwan recorded a net outflow in its financial account for the third quarter in reflection of life insurance companies' overseas bond purchases and an increase in outbound investments by local investors, the central bank said in the latest balance of payments report.

According to the report released earlier this week, a net outflow in Taiwan's financial account during the July-September period totaled US$8.15 billion, the highest level so far this year.

A financial account includes direct investments and portfolios investments in a country.

Although the third quarter was the ninth consecutive quarter for Taiwan to register a net outflow in the financial account, Lin Shu-hua, deputy chief of the central bank's economic research department, said as local investors tended to make overseas investments, such a trend in financial account flows remained normal.

On the back of low interest rates in the domestic market and booming economic fundamentals in United States and Europe, Taiwan's financial account had once showed a net outflow for 10 quarters in a row between 2005 and 2007, the central bank's statistics showed.

In the third quarter of this year, local residents' portfolio investment abroad in the financial account exhibited a net outflow of US$17.21 billion, hitting a record quarterly high, largely due to an increase in foreign bond investments by life insurers and overseas equity investments.

During the same period, however, other investments in the financial account registered a net inflow of US$11.82 billion, reflecting overseas deposit withdrawals by local banks and foreign borrowing by the private sector.

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