Taiwan: Exports dip again in January, signaling ongoing weakness throughout Q1
February 15, 2019
Merchandise exports fell 0.3% in annual terms in January, improving over December’s 3.0% year-on-year contraction and overshooting analysts’ estimates of a 2.9% fall. January nonetheless marked the third consecutive month of decline in exports for the Taiwanese economy, which remains battered by the effects of the U.S.-China trade war and tepid global demand for tech products. Moreover, the feebleness of the trade sector appears likely to continue throughout the first quarter. Indeed, export orders—which usually lead actual exports by two to three months—contracted a staggering 10.5% year-on-year in December after a 2.1% decline in November, suggesting the fall in shipments will likely worsen in coming months. Following January’s print, growth in the 12-month trailing sum of exports fell from 5.9% in December to 4.7% in January.
On a more positive note, despite the general weakness of exports in January, shipments of parts of electronic products—accounting for just under a third of Taiwan’s total exports—managed to stabilize after two months of steep contractions, while exports of information, communication and video products surged by over a fifth year-on-year, although this was partly due to a low base effect. On the flipside, growth in machinery exports weakened while shipments of base metals as well as plastics and rubber sharply contracted.
In terms of regional segmentation, shipments continued to tumble in Taiwan’s largest export markets—namely, mainland China and Hong Kong, and the ASEAN region, which together account for just over a half of total merchandise exports. Conversely, exports to Europe, Japan and the U.S. all recorded strong growth in January, accelerating noticeably from December.
Looking at imports, growth picked up from 2.2% in December to 6.8% in January, due largely to higher imports of electronic parts and mineral products, particularly petroleum. Nevertheless, growth of the 12-month trailing sum of imports fell from 10.5% in December to 9.3% in January.
Lastly, the trade surplus tumbled to a nearly six-year low of USD 0.9 billion in January, down from USD 2.7 billion in the same month of last year (December: USD 4.7 billion), while the 12-month trailing trade surplus fell from USD 49.4 billion in December to USD 47.6 billion in January.
Taiwan Trade Balance Forecast
Our panelists forecast that exports will expand 4.1% in 2019 and imports will rise 4.2%, bringing the trade surplus to USD 51.2 billion. In 2020, our panel expects exports will expand 9.3%, while imports will rise 9.6%, bringing up the trade surplus to USD 55.2 billion.
Author: Joffrey Simonet, Economist