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January-September 2000 Current Account Surplus Exceeds $6 Billion


“The country’s current account surplus for the first nine months of the year widened to $6.141 billion. This positive development arose mainly due to the favorable trade position which was caused, in turn, by the sustained growth of exports.

“Exports of goods grew by 9.4 percent during the first nine months of 2000. Leading exports were electronics, machinery and transport equipment, and garments. However, a slowdown in electronics exports was noted during the period following lower demand for microprocessors and soft prices of electronic goods, particularly semiconductors.

“Imports of goods rose by 4.4 percent, buoyed by the 69.6 percent expansion in the imports of mineral fuels and lubricants following the higher unit price of petroleum crude in the world market even as the volume of oil imports declined. Imports of capital goods likewise rose by 6.0 percent, indicating capacity build-up, particularly in the telecommunication, electronics and electrical machineries sectors. By contrast, imports of raw materials and intermediate goods, and consumer goods contracted by 6.5 percent and 5.9 percent, respectively.

“Despite the strong showing of the current account, the overall balance of payments for the nine-month period registered a deficit of $532 million. This developed due to a weak financial account following net loan repayments and higher net short-term trade credits even as net inflows of foreign direct and portfolio investments were realized.

Net inflows from Foreign Direct Investments reached $1.305 million during the review period, more than twice the net inflows recorded in the comparable period in 1999. Major recipients of foreign direct investments were electronics and automotive components industries, and a chemical manufacturing firm. On the other hand, the Portfolio Investments Account posted a net inflow of $159 million during the review period although this was lower compared to the level posted during the same period last year. Non-resident investments in the national government’s global bond issues in March ($1,600 million) and Samurai Bond issues in August ($320 million) accounted primarily for the favorable performance in the Portfolio Investments Account. Notwithstanding these developments, the Overall Financial Account remained weak during the nine-month period, posting a net outflow of $3,757 million compared to a net inflow of $1,265 million in the same period last year. This was due mainly to loan repayments and short-term capital trade credits consisting mainly of trade receivables from non-residents.

“The external payments position brought the Gross International Reserves to $14,902 million as of end-September 2000. At this level, reserves were equivalent to 4.5 months worth of imports of goods, services and income.

“Relative to the program level, the current account surplus of $6.1 billion was higher by $2.1 billion due to the higher-than-expected trade in goods surplus. By contrast, the capital and financial account deficit was wider by $3.2 billion relative to the program. This developed primarily on account of the lower medium- and long-term loan availments and higher- than-programmed net outflows of short-term capital.

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