Taiwan's exports fell 9.6% y/y in May, marking the 16th straight month of decline. The results were slightly better than estimates of a 9.9% fall, however significantly worse than April where exports fell 6.5% y/y. Imports also fell 3.4% y/y, leaving a $3.5 billion trade surplus for May.
The declines highlight a slowing global economy, specifically in China which is a significant trading partner with Taiwan. We have highlighted for some time that there have been massive amounts of layoffs in China, and the impact is now making its way to the broader global economy. Countries exporting to China will continue to face headwinds, because as we pointed out yesterday the real unemployment rate in China is 12.9%, triple the official reported rate.
As Reuters adds, the near double-digit per cent fall in the data, a gauge of world appetite for high-tech gadgets, comes amid easing expectations for a US rate rise and reinforces the view Taiwan's central bank will likely cut rates for the fourth straight meeting this month as economic growth slows. "There is little chance exports in June can grow," said Yeh Maan-Tzwu, director of statistics department with the finance ministry, which issued the data on Tuesday. "But the decline will certainly narrow." Taiwan's exports in May fell 9.6 per cent from a year earlier, the 16th month of decline. It was better than the 11 per cent contraction forecast in a Reuters poll, but deepened from April's 6.5 per cent fall.
Tuesday's performance showed persistent weakness in key markets, as declines in shipments bound for China and the United States were both down, but the drops were less than April.
However, the fall in exports to Japan nearly doubled in May to 8.9 per cent, from April, while growth in exports to Europe slowed sharply to 2.1% compared with just over 10% previously.
"There is little chance exports in June can grow," said Yeh Maan-Tzwu, director of the statistics department with the finance ministry, which issued the data. "But the decline will certainly narrow."
Exports of electronics components in May fell 1.6 percent from a year earlier, while information, communication and audio-video goods were off 5.5 percent. Optical equipment, which includes displays, were down 23.5 percent.
China's slowdown and concerns the global smartphone industry is losing momentum have darkened the outlook for Taiwanese manufacturers.
"This year the world economy and the semiconductor market are very like last year - rather depressed," Morris Chang, chairman of Taiwan Semiconductor Manufacturing Co told shareholders at the company's annual meeting on Tuesday, even as he maintained business growth for his firm, the world's largest contract chipmaker.