Taiwan export orders resume growth in August, outlook mixed
Taiwan’s export orders unexpectedly expanded in August on strong demand for technology and new consumer electronics product launches like iphones even as the island’s largest market China faced continued headwinds.
But the government said the outlook was mixed due to a series of uncertainties including high global inflation, increasing geopolitical risks and new COVID-19 strains.
Export orders, a bellwether for global technology demand, grew 2 per cent in August from a year earlier to $54.59 billion, a record high for the month, said the Ministry of Economic Affairs on Tuesday.
Analysts had expected a drop of 2 per cent. August’s rise followed a 1.9 per cent annual contraction in July.
Orders for telecommunications products rose 3.1 per cent in August from a year ago due mostly to cellphone orders, the ministry said. Apple Inc, which many Taiwanese firms make components for, put its latest iphones on sale this month.
Orders for electronic products jumped 15.4 per cent, driven by semiconductor demand for high-end computing, automobiles and stockpiling for new consumer electronics, the ministry said.
Kevin Wang, an economist at Taishin Securities Investment Advisory Co, said while the
“pulling in” of Apple orders was a boon, the rest of 2022 may not be as good, coming off a high base from last year and with increased downside risks in China and Europe in particular.
A trend of working and studying from home that started during the COVID-19 pandemic has fuelled a growth in orders for Taiwanese electronics for more than two years. More recently, a global semiconductor shortage has also filled Taiwanese chipmakers’ order books.
The ministry said it expected this month’s export orders to be between 7 per cent and 9.4 per cent lower than those of September 2021.
It said that even with all the uncertainty, new consumer electronics products from “various international brands”, as well as demand for high-end computing, 5G and automotive electronics, would help export orders remain stable going forward.
Taiwanese companies such as Taiwan Semiconductor Manufacturing Co Ltd are major suppliers to Apple, Qualcomm Inc and other global tech firms.
Taiwan’s August orders from China fell 25.5 per cent from a year earlier, compared with an annual fall of 22.6 per cent in July. Monthon-month, orders from China edged down 0.1 per cent.
China’s economy narrowly escaped contraction last quarter due to widespread COVID-19 lockdowns, and economists say its nascent recovery is in danger of fizzling out amid fresh virus flare-ups and a deep crisis in the property sector.
Taiwan’s orders from the United States rose 7.5 per cent on a year before, a healthier pace compared with the previous month’s 6.9 per cent rise.
Export orders from Europe rose 14.6 per cent, versus an annual contraction of 5.1 per cent in July, while those from Japan rose 2.2 per cent.
Meanwhile Taiwan’s central bank is expected to raise its policy rate again this week at the same, relatively mild pace as before, according to economists polled by Reuters, with economic growth, exports and inflation all slowing.
The central bank is likely to lit the benchmark discount rate by 12.5 basis points to 1.625 per cent at its quarterly meeting on Thursday, according to the median forecast of 22 economists surveyed. At the last meeting in June, the bank had raised it by 12.5 basis points to 1.5 per cent.
Five of the economists surveyed said they expected stronger action, a 25-basis-point rise to 1.75 per cent, while one economist predicted it rising to 2 per cent.
The central bank has repeatedly said it will tighten monetary policy this year, in line with counterparts elsewhere.
The polled economists said they expected Taiwan to keep raising the rate until the second quarter of next year, to bring it up to 2 per cent, and then cut it from the fourth quarter of 2023.
Taiwan’s rate decision will come the day ater the US Federal Reserve announces its own. The Fed is again expected to act to control spiralling inflation there, with markets pricing in an interest rate hike of at least 75 basis points.
But Taiwan’s inflation, never as bad as it was in the United States or Europe, is slowing.
Its consumer price index was 2.66 per cent higher in August than a year earlier, the lowest reading in half a year.
The trade-dependent economy is also beginning to show signs of fatigue due to soter consumer demand in major markets China, the United States and Europe. Taiwan’s exports last month rose just 2 per cent on-year and could get worse as the year progresses.
Masterlink Securities Investment Advisory analyst Anita Hsu said the worsening of export momentum had come earlier than expected.
Export orders,a bellwether for global t echnology demand, gr ew 2% in August fr om a year earlier to $54.59 billion, arecordhigh for the month