Taiwan’s exports contracted 8.9 percent to US$25.27 billion last month from a year earlier, as inventory-building demand from customers worldwide failed to materialize, a rare phenomenon, the Ministry of Finance said yesterday.
Last month’s exports were the lowest in 18 months and the annual decline represented the largest in nearly three years, suggesting a slowdown in the technology sector cycle if the trend persists, analysts said.
“The contraction last month was a rarity in recent years, as companies usually start to build inventory after holiday disruptions,” Yeh Maan-tzwu (葉滿足), statistics director at the ministry’s Department of Statistics, told a media briefing.
The contraction in overseas shipments occurred across all product categories — with electronics exports logging a 2 percent retreat, while mineral exports yet to show signs of stabilization, Yeh said.
The much-anticipated demand for inventory replenishment has so far failed to materialize, and the government might have to cut its export growth forecast for this quarter after missing the target last quarter, Yeh said.
Exports totaled US$70.25 billion for the January-to-March period, down 4.2 percent from the same period last year, the ministry said.
The showing is much worse than the 0.49 percent fall the Directorate-General of Budget, Accounting and Statistics predicted in February.
The semiconductor sector, the main growth driver for electronics exports, saw a modest 5.3 percent increase last month, compared with a double-digit increase last year, Yeh said, as global demand was weaker.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, is losing orders to rivals and suffering from slowing smartphone sales in China, the largest destination of Taiwanese exports.
Exports to the US were flat at US$2.95 billion last month and negative elsewhere, according to the ministry’s report.
Shipments to China contracted 8 percent to NT$10.07 billion (US$322.5 million) last month and weakened by 12.9 percent to ASEAN markets, the report found.
Exports to Europe fell 13.6 percent to US$2.25 billion and 11.6 percent to US$1.58 billion to Japan, the report said.
The decline in exports of chemical and plastic products eased, but mineral exporters have yet to emerge from the bottom, Yeh said.
“The situation might not improve much this quarter given lower selling prices in the sectors,” she said.
Australia and New Zealand Banking Group Ltd (ANZ) echoed Yeh’s warning, saying the disappointing trade data suggests a slowdown in growth momentum.
“While oil price fluctuations were the key driver behind the contractions, demand for other products also began to soften,” ANZ Hong Kong-based economist Raymond Yeung (楊宇霆) said.
The central bank might allow the New Taiwan dollar to depreciate against the South Korean won to help boost the competitiveness of Taiwanese exports, Yeung said.
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