Taiwan’s export orders just had the best July ever, expanding at a faster-than-expected rate of 12.4 percent year-on-year to US$45.6 billion, the Ministry of Economic Affairs said yesterday.
That was the fifth consecutive month that export orders grew on an annual basis. On a monthly basis, they also rose 11.1 percent from US$41 billion.
Department of Statistics Director Huang Yu-ling (黃于玲) credited continued strong demand for electronic products arising from the work-from-home trend, coupled with a gradual recovery in oil and raw material prices, for the record number.
Information and communications technology products broke July records at US$14.4 billion in orders, up 11.1 percent month-on-month and 29.9 percent year-on-year, mainly thanks to COVID-19-related work-from-home demand for laptops, tablets, servers and Internet peripherals.
Electronic products also broke July export order records at US$13.25 billion, rising 7.7 percent month-on-month and 25.4 percent year-on-year.
Huang attributed the competitiveness of Taiwanese semiconductor manufacturers and increased demand from 5G, high-performance computing and work-from-home applications for the growth.
On the other hand, orders for metal products declined 5.4 percent year-on-year to US$2.04 billion, while orders for plastic products shrank 4.7 percent year-on-year to US$1.83 billion.
Orders for mechanical equipment grew 6.7 percent annually to US$1.78 billion, making it the first traditional manufacturing category to return to positive growth on an annual basis since the COVID-19-related lows of the first quarter of this year, Huang said.
“We can see that as countries start to ease COVID-19 lockdowns and resume production, there is a catch-up effect as they have started placing orders that were previously delayed,” she said.
However, export orders for chemical products dropped 22.7 percent year-on-year to US$1.43 billion last month.
The decline has accelerated despite recovering oil prices because of fierce international competition, Huang said.
“It is hard for the chemical products to recover as long as there is a global oversupply,” she said.
Huang made a conservative projection for orders this month, placing them at under US$43.9 billion, up 9.6 percent year-on-year, but down 3.7 percent month-on-month.
Asked why the ministry is offering such cautious projections after a record-breaking July, Huang said it is still hard to confidently project continual growth.
“July was very special, and we can say that the third quarter of 2020 will be better than the second quarter, but we are not confident about August orders,” she said.
Notably, the percentage of export orders manufactured outside of Taiwan rose to 55 percent last month, an increase of 3.3 percent year-on-year.
However, Huang said it was not necessarily a cause for concern.
As traditional manufacturing slowly recovers, businesses are more likely to bring their overseas capacities back online because of their lower costs compared with domestic capacities.
“It is more important to us that Taiwanese businesses are doing well than that things are made in Taiwan,” Huang said, adding that the government encourages building up manufacturing capacity only if it is high value-added, regardless of the sector.
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