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Taiwan Feb exports disappoint, but cheaper imports may help economy
[TAIPEI] Taiwan's exports fell more than expected last month as the Lunar New Year holiday shortened the number of working days at factories and weaker commodity prices hit trade.
However, modest gains in exports of electronic goods, improving demand from key markets and the falling cost of imports are likely to support growth for the domestic economy.
The island's exports in February fell 6.7 per cent from a year earlier, exceeding a 1.03 per cent decline expected in a Reuters poll. For the first two months of the year, exports were down 1.3 per cent, Ministry of Finance data issued Monday showed.
Imports fell a sharper 22.4 per cent last month, compared with expectations for a near 6 per cent decline. "The terms of trade are improving," said Ma Tieying, economist with DBS in Singapore. Ma said that the falling import bill would increase corporate earnings and real income for households, which was good news for domestic demand.
The island's manufacturers have reaped from strong global demand for smartphones, especially new models of Apple Inc's iPhone, which drove the island's export orders to a record high last year.
A large portion of those orders tend to be sent to Taiwanese factories located in China, which are then exported from China into final consumer markets. China's exports in February surged 48.3 per cent from a year earlier.
In Taiwan, exports of electronic goods grew 5.3 per cent from a year earlier in February, and were up a stronger 8.8 per cent for the first two months of the year.
Trade data in the first two months of the year tend to be distorted by the Lunar New Year because the multi-day holiday can fall in either month each year. This year the holiday began in February, while it started in January in 2014.
The recovery in the United States, a key market for the island, is sustaining the solid outlook for Taiwan's economy.
US exports rose 11.3 per cent from a year earlier for the first two months of the year, after growth improved to 15.2 per cent last month from January's single-digit gain.
Exports to Taiwan's largest trading partner China slumped 17.3 per cent, those to Europe dropped 3.7 per cent, but shipments rose 12.7 per cent to Japan.
In sharp contrast, China's exports to Europe rose 44.1 per cent from a year earlier.