The steep fall in exports last month is just a temporary setback, as external demand is to log strong growth from this quarter onward, while robust tourist arrivals are to continue to prop up employment and domestic demand, foreign banks said last week.
“We are optimistic about Taiwan’s exports — with electronics exports to propel industrial activity from this quarter — as Asia enters the summer launch season for consumer electronics,” Barclays PLC senior regional economist Leong Wai Ho (梁偉豪) said in a report.
The report came after Taiwan’s exports plummeted 8.9 percent year-on-year last month, worsening from a 6.7 percent decline in February when two holidays reduced the number of working days by 10.
The contraction was deeper than market expectations of a 2 percent retreat that would still hit 3.9 percent if crude oil price disruptions were cut, Leong said, citing the Ministry of Finance’s latest trade data. Barclays attributed the disappointing export data to an unexpected pause in the recent trend of expansion in US demand as evidenced by the slowdown in new orders, according to the purchasing managers’ index.
Geopolitical uncertainty also played a part in the sharp declines in Taiwan’s trade with eastern Europe in the wake of the Russia-Ukraine conflict, and led to a precautionary pullback in intra-Asia trade, Leong said.
In addition, manufacturers held back shipments and cut inventories across supply chains judging from the contraction in two-way trade between manufacturers in Taiwan and their upstream partners in Japan, China and Southeast Asia, he said.
However, with oil prices remaining low, the British banking group forecast that demand from the US and the eurozone would stage a noticeable recovery in the coming months, which is to benefit Taiwan’s technology exports, Leong said. Moreover, there are no signs of a slowdown in tourist arrivals despite weaker domestic demand in China, which is lending support to service sector employment and consumer spending in Taiwan, he added.
JPMorgan Chase & Co painted a similar, picture given that last month’s exports showed broad softness across the technology and non-technology sectors, and across major markets.
In addition, the latest export figures showed a weakness in volume terms rather than price effect drag as in the previous few months, JPMorgan economists Grace Ng (吳向紅) and Lu Jiang (姜璐) said last week.
The global economy is expected to pick up this quarter and that would suggest steady growth improvement in Taiwan’s industrial and export sectors, they said in a note.
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