© Reuters. FILE PHOTO: Cargo trucks work inside a container yard in Keelung, Taiwan, January 7, 2022. REUTERS/Ann Wang
TAIPEI (Reuters) – Taiwan’s exports fell for a fourth straight month in December due to the worsening state of the global economy, as inflation and rising interest rates weighed on demand, and benefits from China’s relaxation of its COVID controls had yet to emerge.
Exports dropped 12.1% by value last month from a year earlier to $35.75 billion, the lowest in 20 months, the Ministry of Finance said on Saturday.
That followed a 13.1% drop in November, and was slightly better than the Reuters poll forecast for a 13.3% contraction.
For December, the ministry said global demand was slowing gradually, due to inflationary pressures and interest rate rises in major economies, as well as disruptions to factory production in China amid a spike of COVID-19 cases after Beijing dismantled its zero-COVID regime.
The ministry saw Taiwan’s exports continuing to decline in the first quarter as it expected the global economy to “slow significantly”, with major uncertainties posed by both the war in Ukraine and the spread of COVID-19 in China.
“The positive demand driven by new technologies and rising silicon content in end products would not be able to offset these negative impacts,” the ministry said in a statement.
Taiwan’s total exports of electronics components in December fell 1.4% to $16.04 billion, with semiconductor exports up 0.8% from a year earlier.
Firms such as TSMC, the world’s largest contract chipmaker, are major suppliers to Apple Inc (NASDAQ:) and other global tech giants, as well as providers of chips for auto companies and lower-end consumer goods.
At $14.28 billion in December, Taiwan’s exports to China, the island’s largest trading partner, were down 16.4% from a year ago, after suffering a 20.9% drop in November.
Taiwan’s finance ministry said risks ahead included uncertainty the US-China tech war, adding that January exports could contract in a range of 20% to 24% from a year earlier.
The ministry’s Tsai said fourth quarter exports – traditionally a busy season ahead of Christmas – dropped 8.6% year-on-year.
December’s exports to the United States were down 2.6%, compared with an 11.3% contraction recorded the previous month.
Taiwan’s December imports, often seen as a leading indicator of re-exports of finished products, fell 11.4% to $30.96 billion, compared with economists’ expectations of a 10.2% fall and after a drop of 8.6% in November.