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