Taiwan: Merchandise exports jump at a softer rate in February

Merchandise exports shot up 9.7% on an annual basis in February thanks to higher electronics exports (January: +36.8% year-on-year). Meanwhile, merchandise imports jumped 5.7% on an annual basis in February (January: +29.9% yoy).

As a result, the merchandise trade balance deteriorated from the previous month, recording a USD 4.5 billion surplus in February (January 2021: USD 6.2 billion surplus; February 2020: USD 3.3 billion surplus). Lastly, the trend pointed up, with the 12-month trailing merchandise trade balance recording a USD 63.4 billion surplus in February, compared to the USD 62.2 billion surplus in January. Export orders—which typically lead actual exports by two to three months— rose 49.3% in January, the latest month for which data is available, suggesting healthy trade momentum going forward.

On the outlook for the external sector, Jeong Woo Park, economist at Nomura, commented:

“The global reliance on Taiwan’s chip industry has become more pronounced since the Covid-19 outbreak, with companies and consumers shifting to a digitalised world. Supply constraints and fast rising demand are likely to prolong the boom in Taiwan’s tech exports. The supply shortage of chips will underpin a steady increase in chip prices, a trend that has started earlier than expected. With soaring demand for chips, the Taiwanese government is encouraging firms to increase their investment, which in turn will likely support labour markets.”

FocusEconomics panelists forecast that exports will expand 4.7% in 2021 and imports will rise 5.8%, bringing the trade surplus to USD 58.3 billion. In 2022, our panel expects exports to grow 4.1% and imports to increase 5.3%, with a trade surplus of USD 57.2 billion.