Taiwan’s export orders contracted for the third time this year in September as demand from China continues to fall, the latest sign the trade-dependent economy is under growing pressure.
(Bloomberg) — Taiwan’s export orders contracted for the third time this year in September as demand from China continues to fall, the latest sign the trade-dependent economy is under growing pressure.
Orders dropped 3.1% in September compared to the same month last year, according to a Thursday statement from Taiwan’s Ministry of Economic Affairs. That was better than the median estimate of a 5% decline in a Bloomberg survey of economists, but worse than August’s 2% growth.
Taiwan’s trade outlook has worsened in recent months as a global slowdown weighs on the economy, and as Covid restrictions and dampened consumer demand in China take a toll. Before September’s data, exports orders had already fallen twice this year in July and April, largely because of the downturn in orders from China and Hong Kong.
Orders from China and Hong Kong decreased 27.9% in September from a year earlier, worsening from August’s 25.5% decline.
“Mainland China’s economic recovery is slower than originally estimated,” affecting the performance of export orders, said Huang Yu-lin, director of the economics ministry’s statistics department, at a press conference Thursday.
Weakening chip demand and China’s economic downturn will provide the “most immediate hit,” said Ho Woei Chen, economist at United Overseas Bank Ltd. before Thursday’s data release. She pointed out that China and Hong Kong account for nearly 40% of Taiwan’s exports, creating uncertainty.
Huang said orders for what the government calls new consumer electronics — a category that includes integrated circuits and memory chips — performed slightly better than expected in September. But she acknowledged that the pace of growth may slow.
Taiwanese officials have been sounding the alarm on trade and economic growth in recent weeks. Earlier Thursday, the Cabinet’s chief statistician Chu Tzer-ming told lawmakers that exports in the third quarter were weaker than expected, according to the Taipei-based Central News Agency.
Chu said it’s hard to say whether 2022 gross domestic product growth will dip below 3.5%, the news outlet reported. The government forecasts GDP will likely grow 3.76% this year, slowing from last year’s growth of more than 6%.
Taiwan Central Bank Governor Yang Chin-long on Wednesday warned the economy’s challenges will become even more severe in 2023, making it harder to predict the outlook for growth, inflation and capital outflows.
Read More: Taiwan Central Bank Sees Severe Economic Challenges Next Year
Yang cited uncertainties from the Russia-Ukraine war and growing US-China trade tensions, which have roiled the chip industry, as factors, along with lingering supply chain disruptions from Covid-19 and high inflation.
Export orders could be a gauge for how Taiwan’s trade shapes up the rest of this year. Exports contracted in September for the first time since 2020, and officials have already warned that “winter is coming” earlier than expected. Finance Minister Su Jain-rong last month said that growth in overseas shipments might slump to single-digits in the fourth quarter.
–With assistance from Cindy Wang.
(Updates throughout with additional details from the press conference.)
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