Soft external demand depressing Taiwan's foreign trade

Taiwan's exports declined faster at -11.7% yoy in April after -8.9% yoy in March, while imports remained in deep contraction (-22.1% yoy after -17.8% yoy). The negative base effects of commodity prices were only part of the weakness. Adjusted for prices, both exports and imports saw bigger declines, reflecting weak external demand. 

"Faster declines in Korean trade and the weakness in HSBC manufacturing PMI in May suggest a deteriorating external sector. Therefore, Taiwan's export growth is likely to have dropped further to -12% yoy in May from -11.7% yoy in April. Import growth is likely to have declined -16% yoy in May, as weak exports probably will have depressed the imports of raw materials and capital goods. As a result, the trade surplus is expected to have increased from an already sizeable $4.7bn to a record $ 5.5bn. Net exports will probably remain a positive contributor to GDP growth in Q2, although economic momentum is deteriorating" , expects Societe Generale.