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Exports growth in Taiwan is expected to temporarily slowdown during the second quarter of this year, before regaining momentum during the second half of 2017. Electronics demand should remain buoyant during the peak season this year, thanks to the upcoming release of iPhone 8, DBS Bank reported.
Trade data have begun to show signs of leveling-off. Exports grew 9.4 percent y/y in April, a slower pace than 13.2 percent in March and the average of 17.3 percent in Jan-Feb. Shipments of electronics components slowed most notably to 10.7 percent, compared to about 20 percent in the previous three months. On the other hand, imports beat expectations by posting a strong rise of 23.5 percent in April.
Imports of semiconductor equipment surged as much as 80.9 percent, indicating that electronics manufacturers continued to expand capex on expectations of stronger overseas demand in the months ahead. The risk of protectionism is easing, thanks to the fine-tuning in Trump’s trade policies and the positive election outcomes in Europe. But the risk of a slowdown in Chinese demand has increased, given the downside surprises in China’s latest PMI and imports data.
A good news for Taiwan is that inflation is easing rapidly. CPI rose merely 0.1 percent in April, a further slide from 0.2 percent in Mar and far lower than the Jan-Feb average of 1.1 percent. WPI growth also decelerated to 1.1 percent, the lowest over five months.
The retreat of domestic food prices, stabilisation in global energy prices and appreciation of the TWD have helped to alleviate inflation pressures, for both the downstream consumers and upstream producers.
"It now looks possible that CPI inflation will stay below 1 percent in the rest of this year – assuming food supply won’t be disrupted seriously during this year’s typhoon season and oil prices won’t rebound much. A lower-than-expected CPI will provide more reasons for the central bank to keep rates unchanged this year," the report commented.
