Taiwan Trade July 2018


Taiwan: Export growth slows markedly in July on first signs of biting trade tensions

August 7, 2018

Merchandise exports grew 4.7% in annual terms in July, sharply decelerating from the 9.4% expansion registered in June and coming in below market expectations of a 7.0% increase. This is the second consecutive month in which Taiwanese exports slowed from the double-digit growth recorded at the beginning of the year—indeed, growth in the 12-month trailing sum of exports moderated from 12.4% in June to 11.7% in July. In addition, the July print follows an unexpected 0.1% year-on-year contraction in export orders in June. Export orders typically lead actual exports by a few months, and thus signal further weakness in the Taiwanese export-oriented sector in coming months as the trade dispute between the U.S. and China rapidly escalates.

Results across sectors were mixed in July. Exports of parts of electronic products—representing around a third of total Taiwanese shipments—rebounded. Meanwhile, information, communication and audio-video products exports contracted. Furthermore, decelerations were recorded in machinery exports, base metals exports and plastics and rubber exports.

The breakdown of exports to key trading partners shows demand in Asia, which accounts for over 60% of exports, slowed markedly in July, led by a sharp slowdown in Japan and a contraction in ASEAN. Demand from mainland China and Hong Kong moderated somewhat, while exports to Europe decelerated notably. As one of the largest suppliers of electronic components to mainland China, Taiwan is particularly vulnerable to increasing trade protectionism between the U.S. and China. According to ING economist Iris Pang, “Negative growth in this sector could reappear in later months if the US imposes tariffs on $200 billion worth of goods and China retaliates. This is because the tariff list would include electronic products, including earphones and other peripheral products for smart devices even though smartphones may be excluded.”

On the other hand, import growth continued to accelerate in July, expanding 20.5% annually, up from 15.4% in June. The increase was primarily driven by strong imports of mineral fuels, especially petroleum. Moreover, imports of electronic parts also picked up in July. Growth of the 12-month trailing sum of imports climbed to 11.1% in July from 9.9% in the 12 months leading up to June.

The trade surplus came in at USD 2.2 billion in July, down from USD 5.2 billion in June. Meanwhile, the 12-month trailing trade surplus fell to USD 57.5 billion in July from USD 60.9 billion in the 12 months up to June.

Taiwan Exports Forecast

FocusEconomics Consensus Forecast panelists expect exports to increase 6.4% in 2018, which is up 0.7 percentage points from last month’s forecast, and 4.8% in 2019.

Author:, Economist

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Taiwan Trade Chart

Taiwan Trade12m July 2018

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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