Taiwan reaps benefits of global rebound as exports top $40 billion

Taiwanese companies sold more than $40 billion worth of goods in a month for the first time, as global demand for semiconductors, gadgets and metals continued to grow. 

Overseas shipments rose 24.6% year on year in October to a record $40.1 billion, data from the Ministry of Finance show, slightly less than the median estimate in a survey of economists. Imports rose 37.2% to $34 billion as the trade balance narrowed to $6.1 billion. 

Strong demand for new technologies, the onset of the peak holiday buying season and increased raw material prices were the main factors behind the increase, according to a statement from the finance ministry. 

“October’s export growth was better than we forecast due to price hikes of raw materials, which offset the drag from electronic components due to high base effect,” Winston Chiao, an economist at Taishin Securities Investment Advisory Co., said in a telephone interview. “Monthly exports of over $40 billion will be no surprise going forward as the global economy recovers and grows, driving demand and prices higher.”

The government sees the momentum continuing through the end of the year. Exports are likely to expand between 22% and 26% in November, the finance ministry’s Beatrice Tsai said in a briefing in Taipei Monday, while full-year exports are likely to surpass $400 billion this year for the first time, she said. 

Taiwan, home to several major producers of leading-edge semiconductors, has been among the biggest beneficiaries of a global rebound in trade as the Covid-19 pandemic eases. International trade is likely to expand 10.8% this year, according to the World Trade Organization, an increase on its previous forecast of 8%.

“Taiwan’s manufacturing sector saw a notable pick up in client demand during October, according to latest PMI data, with total sales rising sharply overall,” Annabel Fiddes, Economics Associate Director at IHS Markit, wrote in a note last week. “However, manufacturers struggled to meet the upturn in orders, as shortages and supplier delays constrained output growth.”

She also noted that higher material, energy and transportation costs may lead companies to raise prices for their clients.

Solid double-digit increases in revenue at Taiwan’s two biggest companies, Taiwan Semiconductor Manufacturing Co. and Hon Hai Precision Co., over the past 12 months have helped drive the economy’s exports to the $40 billion threshold. But the momentum could be about to slow - Hon Hai, the main assembler of Apple Inc.’s flagship iPhone, saw a 10.1% fall in sales in October compared to a year ago.