, Taiwan

Taiwan exports improvement barely significant

Flipside risks still prevail amid export increase of less than 2% of GDP.

According to Alliance Bernstein, the value of services exports has increased by less than 2% of GDP over the past two years. And from a structural growth perspective, we have seen no reversal in a five-year downtrend in the already low investment-to-GDP ratio. 

Here's more from Alliance Bernstein:

First, the improvement was supported by a relatively narrow base that may now be weakening. A trade-dependent economy, Taiwan’s export orders have exhibited close correlation with industrial production, with a slight leading tendency. Regional subcomponents reveal that in the past two quarters, export orders were supported almost single-handedly by US demand, which offset the drag from Europe (which indirectly reflected weakness in Chinese orders). 

Second, although hopes of a stabilization in Europe’s debt crisis grew in the first quarter, the optimism turned out to be short-lived. More recently, fears of an imminent “Grexit” faded after the somewhat market-friendly Greek election results, but attention has quickly turned to the fragile state of the Spanish banking system, highlighting the intractabledownside risks.

Third, we have seen an unintended re-accumulation of inventories by Taiwanese manufacturers as their transitory recovery in the first quarter fizzled out sooner than expected. This is reflected in a rebound in the “stocks of finished goods” subindex in the PMI (Purchasing Managers’ Index) survey. So de-stocking of inventories will likely delay a recovery in industrial output, even as external demand begins to recover.

Join Singapore Business Review community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!