This year, the Taiwan dollar has appreciated more than 4% against the US dollar.
Reuters/Taipei
Taiwan yesterday cut its 2015 full-year economic growth target and said exports will contract fall this year, citing weak demand for the island’s products from China and other markets.
The growth target for the export-driven economy, which the government had raised in February, was reduced to 3.28% from 3.78%.
The Directorate General of Budget, Accounting and Statistics said exports will contract 2.62% in 2015 rather than expand 1.02%. If there is a shrinkage, it will be the first since 2009. Imports are now projected to decline 8.75% this year, rather than decline 2.07%.
Taiwan’s worse-than-expected exports in recent months have provided further evidence that the recovery of global economies remains uncertain and demand for electronic gadgets is soft.
“The Taiwan dollar has been rising faster than currencies in Japan, South Korea and China, leading to relative weakness for tech exports,” said Ku jun-wen, economist at Jih-Sun Securities.
This year, the Taiwan dollar has appreciated more than 4% against the US dollar. Taiwan’s central bank has asked major custodian banks to look into foreign customers’ transactions, two central bank officials told Reuters on Friday, amid worries that foreign inflows could over-inflate the Taiwan dollar.
Also yesterday, the government trimmed Taiwan’s first-quarter economic growth rate to 3.37%, from a preliminary 3.46%.
It slashed the full-year inflation target to 0.13% from an earlier 0.26%.
Earlier this week, Taiwan reported that April had the worst export orders in more than two years, with big falls from Japan and China flagging softening demand for its electronic gadgets.
The orders are a leading indicator of demand for Asia’s exports and for hi-tech gadgets, and typically lead actual exports by two to three months.
“Demand from developed markets, the US and Europe in particular, continues to improve. However, the slowdown in emerging market, falling Chinese demand in particular, does warrant cautions,” according to a UBS report published this week.
Analysts say Taiwan’s exports should pick up in the second half of 2015 thanks to the Christmas shopping season and if Apple Inc’s iWatch shipment meets expectations.
In 2014, driven by Apple’s highly anticipated launch of new iPhone models, the island’s tech exports and overall export orders soared to records.
