Taiwan: Exports fall in February amid the Lunar New Year and fewer shipments to Asia
March 7, 2018
Shipments fell 1.2% year-on-year to USD 22.4 billion in February (January: USD 27.4 billion), interrupting a 16-month export growth streak. This weak performance, which markedly undershot analysts’ expectations of 6.4% growth, was largely a result of the Lunar New Year, which occurred in February this year, as opposed to January in 2017. The first quarter is usually the weakest for the Taiwanese external sector. However, assessing January–February exports together to account for the Lunar New Year effect reveals a growth rate of 7.3% year-on-year, to a record USD 49.8 billion.
Recent data furthermore shows the country can expect a robust trade performance in the coming months, as new export order growth in January—which typically leads actual exports by two to three months— reached the highest rate in nearly a year, buoyed by strong global demand for chips despite the disappointing sales of Apple’s iPhone X. Nevertheless, Taiwanese officials are growing worried about the recent U.S. decision to impose tariffs on steel and aluminum imports. Although steel exports to the U.S. represent less than 0.5% of Taiwan’s total exports, authorities fear a trade war among key global players, which could kill the country’s export momentum.
The decline in February’s export figures was largely a result of a drop in shipments of electronics parts, which account for about a third of total exports. Exports of plastics and rubber also fell, while machinery and base metals recorded moderate growth in the month. The 12-month trailing sum of exports expanded 11.8% year-on-year in February, down from the 13.8% increase recorded in January.
Meanwhile, growth in imports was a meager 0.9% year-on-year in February, down significantly from 23.3% in January, with a total import value of USD 19.5 billion (January: USD 25.0 billion). Aside from petroleum, growth of all major import categories decelerated from January, with imports of machinery and base metals recording a year-on-year decline. When measuring January and February imports together, the annual growth rate reached 12.4%. Growth in the 12-month trailing sum of imports decreased to 11.1% in February, from 13.7% in the 12 months leading up to January.
The trade surplus fell to USD 2.9 billion in February this year compared to USD 2.4 billion in February 2017 (January: USD 2.4 billion). This brought the total trade surplus over the 12 months to February to USD 56.5 billion, down slightly from the USD 56.9 billion in the 12 months up to January.
Author: Joffrey Simonet, Economist