Taiwan: Exports falter in November as Apple cancels iPhone orders
December 7, 2018
Merchandise exports fell 3.4% in annual terms in November, markedly contrasting the 7.3% expansion logged in October, and falling short of market analysts’ expectations of a 1.3% growth print. According to analysts at Nomura and ING, the decline came mainly on the back of weaker smartphone shipments, which were notably impacted when Apple canceled production orders for the iPhone XR, XS and XS Max early in the month. Consequently, growth in the 12-month trailing sum of exports fell from 9.0% in October to 7.5% in November. On a more positive note, export orders in October—which usually lead actual exports by two to three months—expanded 5.1% year-on-year, reaching an all-time high and beating expectations of a 4.4% rise. Nevertheless, analysts warned that a slowdown in new orders for November and December is likely.
Although the decline in exports in November was mainly caused by lower shipments of electronic parts—which include smartphones and account for about a third of Taiwan’s total exports—broad-based losses were also recorded across most commodity groups. Indeed, exports of plastics and rubber and base metals also contracted, while machinery exports fell even more sharply.
In terms of regional segmentation, shipments to mainland China, Hong Kong and the ASEAN area—which together account for just under 60% of total exports—took the brunt of the decline, as the region is tightly integrated in the supply chain for smartphones and electronics. Meanwhile, exports to Europe also fell, while shipments to Japan and the U.S. slowed considerably.
Looking at imports, growth tumbled from 17.6% in October to just 1.1% in November, due largely to lower imports of machinery, as well as chemicals and base metals. Growth of the 12-month trailing sum of imports fell from 12.2% in October to 11.5% in November.
Lastly, the trade surplus rose sharply from USD 3.4 billion in October, to USD 4.7 billion in November. Meanwhile, the 12-month trailing trade surplus fell to USD 50.8 billion in November, from USD 52.1 billion in October.
Commenting on the outlook for Taiwanese exports, Iris Pang, Greater China economist at ING, noted:
“We will see if smartphone orders return in 2Q19. Otherwise, Taiwan's trade may continue to shrink next year until November to bounce back from this year's low base effect. If the tit-for-tat trade war between China and the US continues in 2019, then Taiwan trade will suffer even more than what the November data has shown.”
Author: Joffrey Simonet, Economist