Taiwan May exports post 7th straight drop on global uncertainty

11, Jun. 2019

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TAIPEI, NNA – Taiwanese exports marked a seventh straight month of year-on-year declines in May, hit by slowing global demand amid the U.S.-China trade dispute, data from the Ministry of Finance released Monday showed.

Key points:

―― Exports dipped 4.8 percent from a year earlier in May, weaker than the consensus economist forecast of a 4.5 percent drop. The decrease was led by lower shipments of base metals and products (-20.1 percent), chemicals (-19.3 percent) and plastics and products (-14.0 percent). In contrast, information and communication technology saw a 22.9 percent increase.

―― The contraction in exports extended from -3.3 percent in April and -4.5 percent in March, but was smaller than the recent bottom of -8.8 percent posted in February.

―― Imports slipped 5.9 percent on year, reversing a 2.6 percent increase in April, much weaker than the consensus forecast of 1.25 percent growth. Businesses were cautious about building up inventories amid slow demand and material prices were lower.

―― In the first five months of the year, exports fell 4.2 percent from a year earlier while imports dropped 1.2 percent

―― In May, the trade surplus came to 139.1 billion New Taiwan dollars ($4.4 billion), up 5.8 percent from a year earlier, rebounding from a 31.5 percent slump in April. The surplus for the first five months of this year was NT$496.7 billion, down 16.9 percent from a year earlier.

―― Exports to the United States rose 8.6 percent and those to Japan grew 1.4 percent, thanks to solid demand for information and communication technology as well as audio-visual products. In the January-May period, shipments to the U.S. and Japan both increased a record 17.2 percent and 2.1 percent, respectively.

―― Exports to other major markets registered year-on-year declines: China and Hong Kong combined (-6.9 percent), Southeast Asia (-8.0 percent) and Europe (-11.2 percent).

Takeaway:

―― Taiwan’s exports are expected to remain weak due to an extended life cycle of high-end smartphones and slower global demand caused partly by the U.S.-China trade row.

―― Potential business opportunities in areas such as fifth generation communications technology, automobile electronics, artificial intelligence, the Internet of Things and high-performance computing are likely to somewhat offset the drag from the export slowdown on domestic growth.