Taiwan June exports slump the most in 14 years on weak China, US demand

TAIPEI: In June, Taiwan witnessed a steeper decline in its exports than originally predicted. This decline, the sharpest in nearly 14 years, has been attributed to the ongoing struggle faced by the island in meeting the demand for its advanced technological products from the United States and China.

Given that Taiwan is commonly regarded as a gauge for worldwide electronics requirements, the significant decline in demand raises concerns regarding a potentially feeble latter half of the year.

According to the finance ministry, the value of exports in June dropped by 23.4% compared to the same period last year, amounting to $32.32 billion. This marks the 10th straight month of decline, and it is even worse than the 14.1% decrease observed in May. Additionally, it failed to meet the forecast of a 13.35% contraction as per a Reuters poll.

The government of Taiwan has stated that its export-driven economy is expected to experience a lower growth rate in 2023 compared to previous predictions. The Gross Domestic Product (GDP) for the first quarter saw a decline of 2.87 percent when compared to the same period last year. This drop in GDP is the most severe since 2009 and suggests that the economy has entered into a state of recession.

The overall transportation of electronic parts in June experienced a significant decline of 21.3 percent compared to the previous year, amounting to $13.58 billion. Within this, the exports of semiconductors encountered a decrease of 20.8 percent.

According to the ministry, the situation continues to look bleak. They stated on Friday that they anticipate a significant decrease in exports for the month of July, ranging between 16% and 19.5% compared to the previous year. Additionally, they predicted that foreign trade would face significant challenges due to the impact of global interest rate increases aimed at controlling inflation, along with wider uncertainties in the global economy.

The ministry stated that the possibility of exports bouncing back in September has significantly diminished, and instead, it is more probable for it to happen in November.

The latter part of the year is when bookings typically increase in anticipation of the bustling end-of-year shopping period.

Companies from Taiwan like TSMC, which is known as the biggest chipmaker that provides chip manufacturing on a contract basis, play a significant role in supplying Apple Inc, Nvidia, and other leading multinational technology companies. Furthermore, these Taiwanese firms also contribute by manufacturing chips for automobile companies and affordable consumer products.

United Microelectronics Corp, a smaller rival of TSMC's, announced on Thursday that there was a 23.2 percent decline in sales for June compared to the previous year.

In the month of June, Taiwan witnessed a decline of 22.2 percent in its exports to China, amounting to $11.99 billion. This drop follows the previous month's decrease of 19.4 percent.

In June, there was a significant drop of 25.2 percent in the exports to the United States, following a slight decline of 3.5 percent in May.

The imports in Taiwan for the month of June, which are often considered to be a good indication of how much finished products will be re-exported, reduced by 29.9 percent, totaling $26.36 billion. This is much lower than what economists had predicted, as they estimated a decrease of 16.7 percent. Additionally, it is also a larger decline compared to May when there was a 21.7 percent drop.