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June 25, 2017

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Taiwan export slumps close to bottoming out: Barclays PLC

TAIPEI -- Taiwan's exports should rebound in the coming months on the back of new electronics products, British bank Barclays PLC said yesterday, breaking a streak of six straight months in which exports have fallen on a year-on-year basis.

"We still expect a modest revival in exports from September or October as external growth conditions improve with policy easing," Leong Wai-ho, a senior regional economist at Barclays, wrote in a statement.

Unlike the situation following the global financial crisis in late 2008, plant utilization has fallen slightly but producers are not laying off workers, Leong said.

That reflects the expectation that economic indicators such as Asian Industrial Production (IP), Purchasing Managers Index (PMI) and export readings will rebound quickly once the fear factor subsides, he said.

"We believe this will occur in September and October, led by the electronics cycle," Leong said.

"We expect electronics exports to accelerate, ahead of the planned launch of Apple Inc.'s iPhone 5 and of a new generation of tablet PCs equipped with the new Windows 8 operating system," Leong said.

There are also some hopeful signs from early indicators of August back-to school sales in the United States, which have been less distressed than Asian manufacturers anticipated, Leong added.

This is starting to reassure Asian producers about the strength of pre-Christmas holiday demand, he said.

According to government data released last week, Taiwan's exports fell 4.2 percent in August from the same month last year to US$24.6 billion, the sixth consecutive year-on-year monthly decline.

The fall was deeper than the 2.5-percent decline estimated by Barclays and the 2.7-percent decline expected by the market in general.

In particular, PCs and mobile phone shipments contracted 23.9 percent year-on-year, showing that Taiwan's information and communications technology products are still being hurt by strong competition abroad from rivals Samsung Electronics Co. and Apple.

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