Global warning signs: Taiwan’s exports slump more than expected
6:03 am Wednesday, December 07th, 2022
By Roger Tung
TAIPEI (Reuters) -Taiwan’s exports fell for the third straight month in November and more sharply than forecast due to the worsening state of theglobal economy and China’s COVID-19 curbs, with inflation and interest rate rises weighing on demand across the world.
Exports dropped 13.1% by value last month from a year earlier to $36.13 billion, the lowest figure in 19 months and the sharpest fall in almost seven years, the Ministry of Finance said on Wednesday.
That was much worse than a forecast for a 6.7% contraction in a Reuters poll, and followed a 0.5% drop in October.
The ministry said global demand was slowing “more and more obviously”, hit by the war in Ukraine, unabated global inflation pressures and interest rate increase cycles in major economies.
Ministry official Beatrice Tsai said China’s COVID-19 controls had also hit demand for electronic components, pointing to Apple’s warning last month on lower iPhone 14 Pro and iPhone Pro Max shipments than previously anticipated due to pandemic curbs at a major assembly plant in China’s Zhengzhou.
Taiwan’s total exports of electronics components in November fell 4.9% to $15.15 billion, the first drop in three-and-a-half years, with semiconductor exports down 3.4% from a year earlier.
Firms such as TSMC, the world’s largest contract chipmaker, are major suppliers to Apple Inc and other global tech giants, as well as providers of chips for auto companies and lower-end consumer goods.
Taiwan’s exports to China, the island’s largest trading partner, plunged an annual 20.9% to $13.56 billion in November, after a 9.2% drop in October.
Data earlier on Wednesday showed China’s exports and imports shrank at their steepest pace in at least 2-1/2 years in November, as feeble global and domestic demand, COVID-led production disruptions and a property slump at home piled pressure on the world’s second-biggest economy.
Tony Phoo, senior economist for northeast Asia at Standard Chartered Bank, said weakening demand may continue until the first and second quarters of next year for Taiwan.
“If it continues into the second half of next year, Taiwan’s officially estimated economic growth rate of more than 2% next year will be under pressure,” he said.
Taiwan’s finance ministry said risks ahead included uncertainty around China’s coronavirus policy and the U.S.-China tech war, adding that December exports could contract in a range of 8% to 12% from a year earlier.
The ministry’s Tsai said fourth quarter exports -traditionally a busy season ahead of Christmas – could drop more than 7% year-on-year.
November’s exports to the United States were down 11.3%, compared with a 3.1% expansion recorded the previous month.
Taiwan’s November imports, often seen as a leading indicator of re-exports of finished products, fell 8.6% to $32.7 billion, compared with economists’ expectations of a 0.6% rise and after an increase of 8.2% in October.
(Reporting by Roger Tung; Additional reporting by Jeanny Kao, Sarah Wu and Fabian Hamacher; Writing by Ben Blanchard; Editing by Robert Birsel and Kim Coghill)