Taiwan export order growth seen slowing

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TAIPEI- Taiwan’s export orders likely grew for a third consecutive month in July, but at less than half the pace of the previous month as global demand cools, a Reuters poll showed on Friday.

The median forecast from a poll of 11 economists was for export orders to rise 3.6 percent from a year earlier. Forecasts ranged for an expansion of between 1.1 percent and 7.5 percent.

The island’s export orders, a bellwether of global technology demand, unexpectedly fell for the first time in two years in April. Orders shrank 5.5 percent from a year earlier to $51.9 billion, taking a larger-than-expected hit from COVID-19 lockdowns in China and broader global supply chain disruptions.

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But they returned to growth in May and June. In June orders went up 9.5 percent from a year earlier to $58.83 billion.

The government has predicted July orders to be between 0.4 percent and 3.1 percent higher than the year before.

Taiwan’s export orders are a leading indicator of demand for hi-tech gadgets and Asian exports, and typically lead actual exports by two to three months.

The island’s manufacturers, including the world’s largest contract chipmaker Taiwan Semiconductor Manufacturing Co Ltd, are a key part of the global supply chain for technology giants including Apple Inc.

The data for July will be released on Monday.

Taiwan’s exports rose in June on sustained demand for technology products even as shipments to China weakened, and the government said the outlook was good as companies ramp up for the end-of-year holiday season despite concerns over Ukraine and inflation.

Exports rose 15.2 percent in June from a year earlier to $42.2 billion, the Ministry of Finance said on Friday, the second-highest monthly amount on record and up for the 24th consecutive month.

That was faster than the 12.5 percent rise recorded in May, and better than the 13.55 percent expansion forecast from a Reuters survey of analysts.

The ministry attributed the June growth to strong technology demand, especially for chips, with supply chain problems easing.

However, June exports to China, Taiwan’s largest trading partner, shrank an annual 4.5 percent to $15.43 billion, after a 0.8 percent rise in May, suggesting some continuing drag on China’s economy from disruptions caused by COVID-19 outbreaks.

Overall exports of electronics components rose 19 percent in June to $17.27 billion, the second-highest monthly figure on record, with semiconductor exports jumping 21.2 percent from a year earlier.

Many companies expect global chip shortages to last at least for the rest of the year, which will continue to bolster Taiwanese semiconductor firms’ order books.

The finance ministry warned of continued uncertainty over the war in Ukraine and inflationary pressures, but said the outlook remained bright, with strong demand for semiconductors and the peak export season about to begin for the year-end holidays in the West.

Exports to the United States were up 27.9 percent, much faster than a 15.5 percent jump recorded the previous month.

China will release its June trade data next week, with investors focusing on how quickly its economy and supply chains can recover from COVID lockdown shocks this spring.

Taiwan’s June imports rose 19.2 percent to $37.56 billion, the third-highest monthly figure on record, though worse than economists’ expectations of a 24 percent jump, after an increase of 26.7 percent in May.  

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