Falling crude oil prices may save the nation from posting a trade deficit this month but would not fuel export momentum, which has showed signs of slackening since the beginning of the second half amid a global economic slowdown, pundits said yesterday.
Last month, the nation posted a trade deficit of US$410 million for the first time in two-and-a-half years amid surging oil and metal costs, which drove imports up 12.3 percent year-on-year to US$23.28 billion.
Exports, which had bolstered the economy in the first half by posting double-digit growth, reported a modest gain of 8 percent during the same period.
The Board of Foreign Trade said yesterday that surging fuel and raw material costs were to blame for last month’s trade deficit.
Oil imports last month rose 68.7 percent year-on-year to US$1.38 billion last month, while metal imports surged 22.2 percent, Ministry of Finance statistics showed.
However, the trade deficit is unlikely to recur this month, the board said, given that oil, steel and iron prices had dropped significantly.
Crude oil hit a record US$147 a barrel on July 11, but traded at US$112.91 yesterday.
Liang Kuo-yuan (梁國源), president of Polaris Research Institute, agreed, saying that sliding oil prices were encouraging and could probably reverse the trade balance this month.
“Imports are set to shrink this month in US dollar terms,” Liang said in a telephone interview. “High oil prices also helped curb demand.”
But Liang warned the declining oil prices might not be enough to drive exports, the principal contributor of the nation’s GDP growth.
The researcher said that shipments to Hong Kong and China, Taiwan’s largest export destinations, edged up only 4 percent to US$8.94 billion last month, compared with 25.5 percent in June.
Meanwhile, exports to Europe climbed 5.8 percent to US$2.53 billion, down from 24.2 percent a month earlier, Liang said, adding that the decline in trade with the US widened to 6.1 percent, from 2.6 percent in June.
Liang said the figures indicated that the slowdown had spread from the US to Europe and emerging markets in Asia and the development was bound to hurt the nation’s exports.
Though the central bank has allowed the local currency to depreciate against the greenback to help exports, Liang said the tactic was not potent enough to offset falling demand from major trade partners.
“In fact, I’m afraid that a weakened local currency may drive up the import volume,” Liang said.
Norman Yin (殷乃平), money and banking professor at National Chengchi University, agreed.
Yin said that the nation would not reap quick benefits from falling oil prices, which appeared to have little impact on commodity prices.
“It seems that currencies worldwide have weakened against commodities,” Yin said by telephone.
“The trend will render the depreciation of the New Taiwan dollar ineffective in galvanizing exports, which will post stable but slow growth for the rest of the year,” Yin said.
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