Taiwan has reported a surprise rebound in export growth, driven by stronger demand from the US and China.
In August, the island’s exports increased by 18.4 per cent compared with the same month last year to a record $25.25bn (€17.8bn, $14.4bn), the Ministry of Finance said on Monday.
Most economists had expected export growth to slow further after a sharp drop to only 8 per cent in July. However, analysts say the reversal may be temporary.
Taiwanese companies dominate the world’s production of many electronic components and gadgets such as notebook computers, handsets and game consoles. So the island’s exports often serve as an indicator of demand in the global manufacturing value chain.
Sales to the Chinese mainland and Hong Kong – together forming the largest destination for Taiwan’s exports – grew by 13.9 per cent in a sharp recovery from July, and exports to the US increased by 11.6 per cent, the fastest pace in two years.
Even so, analysts said it was too early to conclude from these signs of life that the US economy had started to turn the corner. “The uptick in exports to the US is mostly due to the back-to-school effect, but we don’t think that will be sustained,” said Cheng Cheng-mount, an economist at Citi in Taiwan.
“Electronics companies are still pretty cautious for the fourth quarter, traditionally the peak season for Taiwan’s exports.”
He said the pick-up in shipments to China should also be viewed as a one-off effect caused by the mainland’s return to normal after the Olympics. Mr Cheng said that July exports to China had been particularly weak because many companies had delayed component purchases from Taiwan in the face of power rationing before the games.
Taiwan’s August imports increased by 39.9 per cent to $25.28bn – also an all-time high – on high oil prices. But the export growth pickup helped to narrow the trade deficit to $30m after July’s shortfall of $412m, and the government said it expected external trade to return to a surplus this month.
The figures came as Taiwan stocks took a 5.6 per cent jump on Monday amid relief over the US government’s bailout of Fannie Mae and Freddie Mac, the mortgage lenders, and expectations that Taiwan’s government would announce a package of market stabilisation and economic stimulus measures later this week.
Paul Chiu, deputy premier, said the government expected economic growth to bottom at just over 3 per cent in the third quarter and then pick up in the three final months of the year, driven by heavy government infrastructure investment.