Taiwan July exports dip on decline in shipments to major markets

08, Aug. 2019

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TAIPEI, NNA – Taiwan’s exports in July declined on a fall in shipments to major markets despite an upsurge in exports to the United States benefitting from production relocation from China to the island.

Electronics parts, information communication and audio visual products enjoyed record high shipments in the reporting month, while base metals, chemical and plastic product shipments plunged, data from the Ministry of Finance released Wednesday showed.

But orders and production capacity switched back to the island from China to avoid higher U.S. tariff have helped to support Taiwan’s economy, an economist said.

Key points:

―― Exports in July edged down 0.5 percent from a year earlier to $28.2 billion, coming in weaker than the consensus forecast of economists polled by Reuters of a 0.5 percent rise. The drop was led by weaker exports in base metals and its products, down 17.7 percent, and chemicals, down 13.4 percent, as well as rubber and plastics, down 10.1 percent.

―― Imports also decreased 5.4 percent on year to $26.4 billion, also lower than the consensus forecast of a 0.9 percent gain, dragged down by declines in mineral products (including crude oil) (-15.9 percent), chemicals (-12.9 percent) and base metals (-10.3 percent).

―― In the first seven months of the year, exports dropped 3.0 percent from the same period of last year to $186.4 billion, led by chemicals (-14.1 percent) and base metals (-12.9 percent), but information communication and audio visual products saw robust growth (+20.3 percent). Imports in the January-July period inched down 0.8 percent to $162.9 billion on a decrease in chemicals (-11.7 percent) and base metals (-11.1 percent).

―― In July, the trade surplus came to $3.57 billion, up 54.6 percent from a year ago. The surplus for the first seven months of this year stood at $23.5 billion, down 15.7 percent from a year earlier.

―― Exports to major markets registered year-on-year declines except shipments to the United States (+21.7 percent). Exports to China with Hong Kong combined, Southeast Asia, Japan and Europe fell 3.6 percent, 5.2 percent, 7.7 percent and 2.0 percent, respectively.

―― In the January-July period, exports to the United States and Japan both increased by 18.0 percent and 0.2 percent, respectively, to reach record highs.

Takeaway:

―― Taiwan has so far benefitted from shifting orders and production relocation from China to avoid higher U.S. tariffs, Achilles Chen, director of the Economic Research Division at Cathay Financial Holding Co., told NNA, but he warned of possible risks such as China’s economic slowdown and the lingering U.S.-China trade dispute.

―― Chen’s team maintains an upbeat forecast of over 2.0 percent economic growth for Taiwan this year.