Taiwan Dec export orders slump as U.S.-China trade row bites

23, Jan. 2019

TAIPEI, NNA – Taiwan’s export orders suffered their sharpest drop in nearly three years in December, as the lingering U.S.-China trade dispute dampens global sentiment and economic growth.

Machine orders for exports dropped 10.5 percent from a year earlier to $43.4 billion last month after slipping 2.1 percent in November, dragged down by sluggish sales of smartphones, Taiwan’s Department of Statistics said Monday.

For the whole of 2018, however, Taiwanese export orders rose 3.9 percent to a record $511.8 billion. Three of seven major categories -- information and telecommunication products, electronics, and machinery -- posted their highest orders ever, the department’s data showed.

In December, those three categories also saw a decline in export orders, indicating the trade dispute is having a widespread impact.

Orders for information and telecommunication products, the largest category by value, fell 13.0 percent on year to $13.8 billion due mainly to a gradual saturation in the high-end smartphone market.

Orders for electronics, the second largest category, also dropped 8.0 percent to $11.6 billion in light of uncertainty over smartphone demand, particularly in China.

“Export orders in the first quarter [of 2019] are expected to continue falling” amid market gyrations and dampened sentiment due to the trade dispute, the government agency said.

Demand for smartphones remains sluggish as the high-end smartphone market is becoming saturated and the product replacement cycle has become longer, which is hurting firms in the supply chain, it said.

Mizuho Research Institute estimated in a recent report that Taiwan would be hit hard by the U.S.-China trade war as its parts and materials exports slump before any longer-term positive effects, such as relocation of factories from the mainland to Taiwan, begin to support the island’s small economy.