Taiwan April exports ease on rise in real external demand

The export orders in Taiwan eased in April, compared to the first quarter of the current fiscal, largely due to the  remained flat majorly. However, Japanese demand for Taiwanese goods declined, which lent a slightly sluggish tone to Taiwan’s trade balance.

Further, imports declined to -9.6 pct on year compared to -14 pct during the three months ended Mar, 2016 as global commodity prices snapped their fall amid sluggishness in recovery of domestic demand. As against March figures, capital goods imports stood flat, while consumer goods witnessed a fall.

April trade surplus surged to six-month high of USD4.8 billion, with only USD 1.6 billion accounting for increase in foreign reserves, partly due to rise in the non-dollar reserve currencies. This received impetus from the outward financial investment by domestic residents, as a result of poor growth prospects and weaker yields in the domestic bond market.

"Overall, April trade data support our view that GDP growth will bottom out in 2Q, but remain subnormal. The central bank will likely continue facing pressure to cut rates at the June meeting to provide additional policy stimulus and foster growth recovery," DBS reported.

The possibility of third quarter Fed rate hike would continue to boost domestic capital outflows, a potential source of pressure that would weigh on the TWD exchange rates, DBS added.