Taiwan’s export’s outlook still weak, demand likely to remain at lower levels in 2016

In February 2016, Taiwan’s export orders declined 7.4% y/y, as compared with January’s decline of 12.4%. However, the smaller rate of decline should not be interpreted as a sign that external demand has started improving. The rebound in headline numbers was mainly due to the low base effects. Export orders for January and February combined declined 9.9% y/y on average, worse than Q4 2015’s decline of 8%.

In February 2016, the total value of export orders reached USD 27.7bn, much lower than USD 29.9bn recorded in February 2015 when the number of working days also fell because of the Chinese New Year. Overall, the export orders data does not imply that exports outlook has started recovering.  If the global financial markets continue to be stable and sentiment also continues to improve, business plans will be resumed, while exports demand will also recover slightly in Q2 2016.

However, beyond that, demand will continue to be at lower levels in the later part of 2016 due to further slowdown in China’s economy and tepid growth in the G3. Taiwan’s exports are expected to contract by 3.6% for the full year of 2016, although a milder decline than 2015’s 10.9%.