Taiwan’s foreign trade to drop again in June

Taiwan's export growth improved to -3.8% yoy in May from -11.7% yoy in April and import growth during the month recovered to -5.4% yoy from -22.1% yoy. However, the implied growth rates of trade mom seem too strong to remain persistent against a backdrop of falling orders and production. And the Ministry of Finance put "increase in working days" in its press release as one reason for the May strength. June PMI reports across Asia suggest deteriorating activity and demand in the region. 

"Moreover, we believe the improvement in Korea trade in June is mainly due to a technical factor rather than stronger fundamentals. Therefore, we expect Taiwan's export growth to have deteriorated again to -9% yoy in June from -3.8% yoy, a combination of a correction of the previous month's strength and weak external demand", according to Societe Generale. 

Import growth is likely to have fallen back to deep contraction as well, given a strong negative base effect and cooling investments, adds SocGen.