Taiwan June exports unexpectedly rise on production switch from China

09, Jul. 2019

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TAIPEI, NNA – Taiwan’s exports unexpectedly rebounded in June from seven months of year-on-year declines as more Taiwanese firms moved production back home to avoid higher U.S. tariffs on imports from China, data from the Ministry of Finance released Monday showed.

Key points:

―― Exports in June edged up 0.5 percent on year, coming in stronger than the consensus economist forecast of a 4.0 percent drop. The rebound was led by revived demand for integrated circuit products, up 8.0 percent, and increased production capacity in the information and communication technology sector, which surged 20.2 percent.

―― Imports increased 6.6 percent on year, also higher than the consensus forecast of a 0.5 percent drop, led by capital equipment (+41.6 percent), with semiconductor devices almost doubling (+97.0 percent).

―― In the first six months of the year, exports dropped 3.4 percent from a year earlier, led by chemicals (-14.2 percent) and base metals (-12.1 percent), while imports inched up 0.1 percent on capital devices (+15.8 percent).

―― In June, the trade surplus came to 121.8 billion New Taiwan dollars ($3.9 billion), down 22.3 percent from a year earlier. The trade balance has been in surplus since June 2018. The surplus for the first six months of this year was NT$617.6 billion, 18.1 percent less than a year earlier.

―― Exports to major markets registered year-on-year declines except for shipments to the United States (+18.5 percent): China and Hong Kong combined (-3.8 percent), Southeast Asia (-7.1 percent), Japan (-0.4 percent) and Europe (-8.6 percent).

―― In the January-June period, exports to the U.S. and Japan both increased at a record pace of 17.4 percent and 1.7 percent respectively.

Takeaway:

―― Global uncertainty is expected to slow the island’s export-reliant economy despite the recent U.S.-China trade truce. The saturated high-end smartphone market and extended product cycles are also posing a headwind for Taiwan’s technology sector.

―― On the other hand, capacity expansion due to relocation of production from overseas as well as potential growth in global demand for new technology may support exports.