Exports are to resume growth from September as inventories are digested, while the US-China trade dispute is likely to ease following an APEC summit in November, Fubon Financial Holding Co (富邦金控) chief economist Rick Lo (羅瑋) told a forum in Taipei yesterday.
The nation’s exports fell for seven consecutive months from November last year to May, and the Directorate-General of Budget, Accounting and Statistics has projected that exports numbers might not grow for the remainder of the year.
“Some companies are hesitating to place new orders amid the uncertainty stemming from the trade dispute, while other companies have continued to cut their orders, as they increased orders before the tariffs took effect last year,” Lo said.
Photo courtesy of Fubon Financial Holding Co
Exports are forecast to rebound at the end of the third quarter at the earliest, depending on when companies have completed their inventory adjustments, Lo said, adding that the third quarter is also peak season for electronics-oriented exporters.
Overall, Fubon has maintained its forecast for the nation’s GDP growth this year at 2 percent, saying that strong private investment and stable domestic consumption would be the two main growth engines, Lo said.
As for a truce reached between the US and China this weekend following a meeting between US President Donald Trump and Chinese President Xi Jinping (習近平) on the sidelines of the G20 summit in Japan, Lo said it does not indicate that the trade dispute has been resolved, as the two nations once again put off talks, neither making compromises nor revealing concrete details of what was agreed.
However, they are still expected to find common ground at an APEC meeting in November, as Trump, who is seeking re-election next year, would want to please US voters and companies by reaching a deal with China, he said.
Any deal reached in November is likely to be a framework agreement, or a preliminary deal before a final agreement is reached, on Chinese procurement or removal of trade barriers, given that it is not easy for the world’s two largest economies to reach a consensus on every issue, he added.
“This would be a better scenario for Taiwan compared with a full-blown trade war, which would hit the Taiwanese economy by weakening global trade and the Chinese economy,” Lo said.
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