TAIPEI: Taiwan’s export orders in April fell 1.1 per cent from a year earlier, shrinking for a third month in a row, but orders from the United States and China rebounded, pointing to recovering demand for the island’s high-tech exports.
The still-weak data, however, underlines expectations the island’s economic growth outlook is at risk of a bigger than expected downgrade. Taiwan’s government has said it would cut this year’s growth forecast in May due to sluggish exports data.
Ten economists polled by Reuters had forecasts ranging from a 5 per cent contraction to 3.2 per cent growth.
Export orders in March declined 6.6 per cent from a year earlier and fell 14.5 per cent in February.
But April orders from two major markets turned around, with those from China up 6.2 per cent and the United States up 4.9 per cent. Those from Europe were down 6.7 per cent and Japan 20 per cent.
“The US will likely experience inventory correction in Q2 so orders will be weak, and China is undergoing some tightening so overall orders will be weak too,” said Michelle Tsai, an analyst at Jih Sun Securities.
“A shift of orders to Japan has become apparent in April as a weakening yen has strengthened Japan’s competitiveness, and this impact may last until Q3-Q4,” she added.
Taiwan’s export orders are a leading indicator of demand for Asia’s exports and for hi-tech gadgets, and typically lead actual exports by two to three months.
The export picture has also turned challenging for Taiwan’s rivals. South Korea’s exports in April grew by a meager 0.4 per cent from a year earlier, showing that trade momentum remains subdued and could be further squeezed by the effects of weaker currencies, especially the yen which has improved the competitiveness of Japan’s export industry.
But some Taiwan exporters said they would not be affected.
“It’s positive to us because some of our components are settled in yen. There are only a few touch panel makers in Japan so it doesn’t hurt our competitiveness,” said Wintek’s Finance Director Jay Huang. Wintek is a touch panel supplier of Apple Inc.
Taiwan’s decline in export orders raises concerns that the second quarter could be shaping up to be much weaker for Asia’s trade-reliant economies.
Taiwan’s economy grew by a slower-than-expected 1.54 per cent in the first quarter from a year earlier, as export growth fell short of expectations.
Exports shrank unexpectedly in April as sales to China and Europe sputtered, underscoring increasing fragility in global demand.