The Taiwanese government said the economic outlook was clouded by inflation.
Taiwan’s exports grew in August, helped by demand for technology products, although shipments to China fell due to economic difficulties and the government said the outlook was clouded by inflation, the war in Ukraine and Sino-American tensions.
Exports rose 2% in August from a year earlier to $40.34 billion, the finance ministry said Wednesday, an all-time high for the month and an increase for the 26th straight month.
That was, however, much slower than the 14.2% rise recorded in July and below expectations for a 9.5% rise in a Reuters poll.
The ministry said technology demand was fueling growth, but added that consumer spending was gradually slowing due to global inflationary pressure and monetary policy tightening, citing “more conservative buying intentions on the part of manufacturers”.
Anita Hsu, an analyst at MasterLink Securities Investment Advisory, said signs of Taiwan’s economy deteriorating were becoming clearer.
“I’m afraid the rest of this year will get worse and worse,” she added.
Exports to China, Taiwan’s biggest trading partner, fell 9.9% a year to $15.12 billion in August, following a 3% expansion in July, in a demonstration of the economic problems there. down.
China’s exports and imports lost momentum in August as growth fell sharply from forecasts as soaring inflation crippled foreign demand and new COVID curbs and heatwaves disrupted production locally .
Overall, Taiwan’s electronic component exports in August rose 12 percent to $17.05 billion, with semiconductor exports jumping 14.3 percent from a year earlier.
Many companies expect global chip shortages to last at least the rest of the year, which will continue to bolster order books for Taiwanese semiconductor companies, even as demand for some electronics grows. audience weakens.
Taiwanese chipmaker United Microelectronics Corp (UMC) reported a 34.9% increase in August sales on Tuesday.
Companies such as TSMC, the world’s largest contract chipmaker, are major suppliers to Apple Inc and other global tech giants, as well as chip suppliers to automakers and consumer goods. low end.
Fitch Ratings said on Wednesday that while external demand for Taiwan’s high-tech exports was likely to fall, it should also “remain robust.”
The Finance Ministry has warned of uncertainties ahead due to high global inflation, Russia’s invasion of Ukraine and the “China-US tech war”, even as it was expecting sustained demand for chips.
Ministry official Beatrice Tsai said trade during peak season, traditionally the months before Christmas, was unlikely to be as strong as in previous years.
August exports to the United States rose 2.3%, much slower than the 24.8% jump recorded the previous month.
Taiwan’s imports in August rose 3.5% to $37.35 billion, also a record for the month but worse than economists’ expectations of a 7.1% increase, after a 19-year jump .4% in June.
Taiwan could see its exports in September range from a 3% contraction to a 1% expansion from a year earlier, the finance ministry said.
Central bank stimulus: The head of Taiwan’s central bank said Wednesday that external demand momentum will slow next year and expansionary fiscal policy should be adopted to boost domestic demand.
The central bank will also adopt an appropriate monetary policy in due course, but Taiwan should not be guided by the U.S. Federal Reserve’s monetary policy structure and decision-making, Governor Yang Chin-long said in a briefing. forum.
Taiwan’s export-dependent economy has been buoyed by a global semiconductor shortage that has filled the order books of the island’s chipmakers. But exports have started to falter due to lower consumer demand in major markets of China, the United States and Europe.
While last year the economy grew 6.45%, the fastest since growing 10.25% in 2010, it is expected to grow more slowly this year, hit by COVID-19 lockdowns. 19 in China and the impact of the war in Ukraine. Taiwan’s statistics agency last month lowered its gross domestic product forecast for 2022 to 3.76%, from a growth forecast of 3.91% in May, and cut its export outlook for the country. year.
Yang, in comments posted on the central bank’s website, said that this year and next, Taiwan’s economic growth will slow, but compared to major economies it will remain “stable”, adding that the inflation next year is expected to fall back to less than 2%.
But Taiwan’s economy is different from that of the United States, as are their monetary policy considerations, so the central bank should not be guided by the policy structure of the US Federal Reserve, he said. .