Taiwan’s exports fell in October in sign demand remains weak

Taiwan’s exports fell in October, tempering earlier signs of optimism that global demand for the island’s tech products is rebounding.

Overseas shipments dropped 4.5% last month from a year earlier, the Ministry of Finance said in a statement on Tuesday. That was despite exports rising in September for the first time in more than a year. A Bloomberg survey of economists predicted exports would stay flat.

The trade surplus stood at $5.77 billion after climbing to a record $10.3 billion a month earlier. Imports shrank 12.3%, compared to economist expectations for a 15.2% decline.

Despite Tuesday’s worse-than-expected figures, officials see the contraction as being short-lived. Exports are likely to grow between 3% and 6% in November, according to the ministry.

“It feels like dawn is approaching, at least according to industry,” the finance ministry’s chief statistician, Beatrice Tsai, said in a briefing. Citing the island’s top chip maker, she added that “TSMC said that the market may be nearing the bottom, and many other major manufacturers also said that the market downturn is coming to an end, because exports will turn positive in the fourth quarter.”

Taiwan has seen demand for its its main exports — semiconductors — slump following a Covid-era boom in internet activity, prompting concern among investors over when it will rebound. Overseas shipments of chips fell 6.5% in October. 

“We have been expecting a normalization in Taiwan’s exports given strong growth in recent months,” Michelle Lam, an economist at Societe Generale said via message. “There seems to be some slowdown in tech exports again in October, including electronic parts and info and communication equipment which has benefit hugely from AI demand.”

“For now we would read this as a pause in the recovery rather than a beginning of a new downtrend,” she added.