Tai­wan ex­ports likely to bot­tom out in Q3, says Bri­tain’s Bar­clays

The China Post - - TAIWAN BUSINESS -

Bri­tish bank­ing group Bar­clays Plc forecast a slightly brighter out­look for Tai­wan’s third-quar­ter ex­ports on Wed­nes­day, cit­ing grad­ual re­cov­ery in ex­ter­nal de­mand and new prod­uct launches such as the iPhone 6s and Win­dows 10.

Tai­wan’s ex­ports tum­bled by 11.9 per­cent year-on-year in July, which again was weaker than Bar­clays’ es­ti­mate of a 10 per­cent de­crease and the mar­ket ex­pec­ta­tions of a 10.5 per­cent de­crease.

The de­cline was pri­mar­ily pre­cip­i­tated by a sig­nif­i­cant drop in re­fin­ery and petro­chem­i­cals ship­ments — mainly to China.

An im­por­tant sil­ver lin­ing is that the elec­tron­ics sec­tor was much less of a drag on over­all ex­ports in July than in June — a sign that ac­tiv­ity lev­els may have bot­tomed out and that the sup­ply chain is re­build­ing ahead of new launches, said Leong Wai Ho, a se­nior re­gional economist with Bar­clays.

“Look­ing ahead, we still be­lieve a late sum­mer turn­around in ac- tiv­ity re­mains in place, helped by sta­bi­lized oil prices and grad­ual re­cov­er­ies from the U.S. and Europe,” Leong said.

“Fur­ther­more, new prod­uct launches such as the iPhone 6s (most likely in early Septem­ber) and Win­dows 10 (op­er­at­ing sys­tem) equipped de­vices should help lift ac­tiv­ity within the elec­tron­ics sup­ply chain in Q3,” he wrote in a re­search note.

By mar­ket, Tai­wan’s ex­ports to all ma­jor des­ti­na­tions con­tracted in July, led by a 16.6 per­cent year-on year drop in ship­ments to China.

Ship­ments to the Euro­pean Union fared poorly as well, fall­ing by 15.7 per­cent from a year ear­lier, while U.S.-bound ship­ments grew 1 per­cent af­ter de­clin­ing by 8.2 per­cent in June.

Leong noted that one im­por­tant fac­tor of sup­port was the steady im­prove­ment in Tai­wan’s cap­i­tal goods im­ports, which climbed 13.1 per­cent in July — a sig­nal that typ­i­cally pre­cedes a broader sta­bi­liza­tion of in­dus­trial ac­tiv­ity.

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