Taiwan Trade April 2019


Taiwan: Export contraction eases in April but March export orders still a lingering concern

May 7, 2019

Merchandise exports fell 3.3% in annual terms in April, which was less severe than the 4.4% contraction registered in March but still marked the sixth consecutive month of decline in Taiwan’s trade sector. As in previous months, the print was weighed on by weak global demand for tech products amid the ongoing Sino-American trade war and a slowdown in mainland China.

Export orders for March, which typically lead actual exports by two to three months, also continued to tumble; they slid 9.0% year-on-year after declining 10.9% in February, which marked the sharpest contraction in nearly three years. Furthermore, an official from the Ministry of Economic Affairs indicated that export orders were projected to continue contracting in the second quarter, although launches of new smartphone models and higher demand for new technologies such as artificial intelligence and 5G could support a rebound in electronic parts orders. Overall, though, this strongly suggests the trade sector will remain in the doldrums throughout Q2 and into the first months of Q3.

Zooming in, the main positive development in April was that exports of electronic parts—accounting for just under a third of total exports—declined at a softer pace than in March. However, while still strong, export growth for information, communication and audio-video products decelerated substantially. Moreover, shipments of machinery, base metals, and plastics and rubber contracted at an even sharper pace in the month. On a geographical basis, exports to mainland China and Hong Kong—Taiwan’s premier export markets—fell at a softer clip; meanwhile, shipments to Japan and Europe contracted again after registering modest growth in March.

Imports rose 2.6% year-on-year in April, down from 6.6% in March, due to a contraction of imports of electronic parts; conversely, growth in machinery imports remained robust. Growth of the 12-month trailing sum of exports fell from 2.4% in March to 1.3% in April, while growth of the 12-month trailing sum of imports fell from 7.4% in March to 7.2% in April. Lastly, the trade surplus plunged to USD 2.7 billion from USD 4.2 billion in April 2018 (March 2019: USD 3.1 billion), while the 12-month trailing trade surplus fell from USD 46.8 billion in March to USD 45.3 billion in April.

Looking ahead, short-term prospects remain bleak, as shown by the feebleness of export orders. Moreover, the recent escalation of the U.S.-China trade war poses further downside risks to Taiwan’s external sector. While Taiwan’s main exports have so far been largely spared from U.S. tariffs, the U.S. trade representative recently began the process to impose levies on the remaining USD 300 billion of Chinese imports currently not taxed, which could come into force as early as July. According to Ma Tieying, an economist at DBS, this poses a much bigger threat as it would cover most electronic products in which Taiwanese firms are involved. She added that “trade disruption risk could be significant. If 25% tariffs on the USD300bn Chinese exports are fully implemented later this year, we reckon that it could shave Taiwan’s GDP growth by close to 1ppt during the 2019-20 period. […] The re-escalation of trade tensions will likely further weigh on the near-term growth outlook through dampening business sentiment and augmenting financial market volatility.”

Our panelists forecast that exports will expand 3.4% in 2019 and imports will rise 3.1%, bringing the trade surplus to USD 52.3 billion. In 2020, our panel expects exports will expand 5.0%, while imports will rise 4.7%, increasing the trade surplus to USD 55.8 billion.

Author:, Economist

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Taiwan Trade Chart

Taiwan Trade12m April 2019

Note: 12-month sum of trade balance in USD billion and annual average variation of the 12-month sum of exports and imports.
Source: Ministry of Finance (MOF) and FocusEconomics calculations.

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