Taiwan External Debt (USD bn)

Merchandise exports contract at a more moderate rate in February

Merchandise exports plummet in January

Merchandise exports dived 21.2% year-on-year in January, following December’s 12.1% plunge and marking the sharpest decline since August 2009. The drop was driven by lower exports of electronics, IT goods, base metals, chemicals and machinery. Among the main trading partners, there was a sharp contraction in shipments to China and ASEAN. On the contrary, exports to Japan and Europe grew, albeit at a sluggish pace. Meanwhile, merchandise imports plummeted 16.6% over the same month last year in January (December: -11.4% yoy), marking the weakest result since January 2020.

As a result, the merchandise trade balance deteriorated from the previous month, recording a USD 2.3 billion surplus in January (December 2023: USD 4.8 billion surplus; January 2022: USD 5.0 billion surplus). Lastly, the trend deteriorated, with the 12-month trailing merchandise trade balance recording a USD 49.4 billion surplus in January, compared to the USD 52.1 billion surplus in December.

Exports are likely to remain downbeat in the near term as momentum eases in the developed world. However, a rebound in China and sustained global demand for advanced technology such as 5G will provide some support. Our analysts only see exports returning to growth in Q4 this year.

Merchandise exports sank 17.1% in annual terms in February, following January’s 21.2% plummet. February’s reading was driven by steep declines in all subsectors. Looking at key markets, exports to China fell particularly sharply. Meanwhile, merchandise imports declined 9.4% in annual terms in February (January: -16.8% yoy) on lower imports of electronics, chemicals and base metals.

As a result, the merchandise trade balance recorded a USD 2.3 billion surplus in February (January 2023: USD 2.3 billion surplus; February 2022: USD 5.8 billion surplus). Lastly, the trend deteriorated, with the 12-month trailing merchandise trade balance recording a USD 45.4 billion surplus in February, compared to the USD 48.8 billion surplus in January.

Exports are likely to remain downbeat in the near term as momentum eases in the developed world and semiconductor demand ebbs. However, a rebound in China’s economy will provide some support. Our analysts only see exports returning to growth in Q4 this year.