Taiwan June exports likely to witness smallest decline in over 1.5 years

Taiwan’s exports during the month of June are expected to witness the smallest decline in over one-and-a-half years, largely owing to the stabilization in global oil and commodity prices. However, the outlook for a real recovery remains elusive, DBS reported.

Exports are expected to register -3.0 percent y/y, since the risks emerging from a slowdown in the Chinese economy have not yet subsided. Moreover, the Brexit uncertainties and prevailing risks have added to the Taiwan’s subdued outlook.

However, on the positive scale, inflation has continuously eased in Taiwan. Headline CPI dropped to 0.9 percent y/y in June, the lowest over five months; while core CPI also decelerated slightly to 0.8 percent. In addition, food prices fell the most, tracking normalized weather conditions and recovery in agricultural supply.

Further, with headline and core CPI both slipping below 1 percent, real deposit rates have returned to the positive territory. The 1-year time deposit rate has been lowered to 1.035 percent by major commercial banks following the central bank’s rate cut on June 30.

"There will be the room for the central bank to further trim the discount rate by 25-37.5 basis points from the current levels if additional monetary stimulus is required to shore up the economy," DBS commented in its recent research report.