Taiwan June exports slump the most in 14 years on weak China, US demand
Authored by Roger Tung and Faith Hung
Taipei (Reuters) - In June, Taiwan experienced a significant decline in its exports, surpassing expectations and marking the biggest drop in nearly 14 years. This decline can be attributed to the ongoing challenges that Taiwan is facing in terms of the weakening demand for its advanced technological goods from both the United States and China.
Because Taiwan is seen as a good indicator for the demand of electronic products worldwide, the significant decline in demand raises concerns about a significantly weaker second half of the year.
The finance ministry declared that the value of exports in June experienced a significant decline of 23.4% compared to the previous year, reaching a total of $32.32 billion. This marks the 10th consecutive month of decline and portrays a poorer performance than the 14.1% decrease witnessed in May. The contraction in exports also failed to meet the expectations of a 13.35% decline as predicted in a Reuters poll.
The government of Taiwan has stated that the country's economy, which heavily depends on exports, is expected to experience a slower growth rate in 2023 compared to previous predictions. This is due to the fact that the GDP for the first quarter has declined by 2.87% when compared to the previous year, marking its most severe slump since 2009. As a result, there are indications that the economy may have entered a state of recession.
In June, the overall number of electronic components shipped had a decline of 21.3% compared to the previous year, reaching a total value of $13.58 billion. Notably, the export of semiconductors also experienced a decrease of 20.8%.
According to the ministry, the future looks bleak as it expressed its forecast on Friday. It anticipates a decline in exports during July, estimating a drop ranging from 16% to 19.5% compared to the previous year. Additionally, the ministry predicts significant challenges for foreign trade due to the worldwide increase in interest rates, aimed at curbing inflation. Moreover, the ministry highlights the presence of broader uncertainties in the global economy.
According to the ministry, the likelihood of exports experiencing a surge in September has significantly reduced. They stated that it would be more plausible for this growth to happen in November.
The latter part of the year is typically when orders start to increase before the bustling year-end shopping period.
Companies from Taiwan, like TSMC, the largest independent chip manufacturer worldwide, hold significant roles as providers for Apple Inc, Nvidia, and other leading tech companies globally. Additionally, these Taiwanese firms supply chips for automobile manufacturers and less expensive consumer products.
United Microelectronics Corp, a rival of TSMC's but on a smaller scale, announced on Thursday that there was a significant decline of 23.2% in their June sales compared to the previous year.
In June, Taiwan's shipments to China recorded a decrease of 22.2% compared to the previous year, amounting to $11.99 billion. This follows a decline of 19.4% in the previous month.
In June, the amount of goods sent to the United States decreased by 25.2%, following a 3.5% drop in May compared to the previous year.
The imports of Taiwan in June, which are usually seen as a signal for the re-exports of completed goods, experienced a significant decrease of 29.9% amounting to $26.36 billion. This outcome was contrary to the prediction made by economists, who expected a decline of 16.7%, and also showed a bigger drop compared to the 21.7% decrease observed in May.
Written by Roger Tung and Faith Hung; Edited by Ben Blanchard, Devika Syamnath, and Kim Coghill
