Sat, Apr 27, 2019 - Page 12 News List

Export gauges diverge, complicating forecasting: bank

By Kao Shih-ching  /  Staff reporter

Those who intend to use national export order data to forecast export numbers might be disappointed, as the government’s two gauges diverge this year due to a supply chain transfer amid the US-China trade dispute, Standard Chartered Bank Taiwan Ltd (渣打台灣銀行) said.

“Although export orders are often regarded as the leading indicator of exports, they have failed to work this way since January,” Northeast Asia senior economist Tony Phoo (符銘財) told the Taipei Times on Tuesday.

Export orders are an indicator of companies’ sales performance based on a monthly survey of more than 3,000 Taiwanese companies, including those with production bases at home and abroad, while exports purely reflect the sales performance of local manufacturers.

The two gauges have begun decreasing since November last year, with exports outperforming export orders as local manufacturers are less affected by the trade dispute than their overseas peers, Phoo said.

While export orders last month declined 9 percent year-on-year and 8.4 percent annually in the first quarter, exports last month fell 4.4 percent from a year earlier and dropped 4.2 percent annually for the January-to-March period, Phoo said, citing government data.

However, it is strange that while first-quarter export orders from the US plunged 7 percent from a year earlier, exports to the US advanced 20.4 percent over the same period, Phoo said, adding that this is rare and confused many overseas-based economists who were monitoring Taiwan’s economy.

The barometers also showed a divergence in Japan, with first-quarter export orders declining 2.8 percent, but exports advancing 4.9 percent from a year earlier, Japanese government data showed.

The two gauges were sending different messages, despite an escalation in trade tensions, Phoo said.

Companies that manufacture locally might have benefited from new export orders from the US, with orders transferred from some Taiwanese firms producing in China as customers avoid Chinese-made products, he said.

Taiwanese companies returning home from China also helped boost exports to the US, he added.

“The supply chain transfer is expected to continue this year, as the trade dispute has not been resolved,” Phoo said.

Exports are expected to continue performing better than export orders, but it is hard to tell when the divergence would end, he said.

“Although exports are more important in determining if Taiwan’s economy has passed the trough, we should pay attention to the decline in export orders, as they represent the performance of Taiwanese companies that produce overseas,” he said.

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