TAIPEI (Reuters) – Taiwan’s export orders contracted more severely than expected in October on weak consumer demand hit by inflation and interest rate hikes, with the government warning that China’s insistence on a zero-COVID strategy would affect the outlook.
Export orders, a bellwether for global technology demand, shrank 6.3% in October from a year earlier to $55.4 billion, the Ministry of Economic Affairs said on Monday. Analysts had expected a drop of 1%.
GRAPHIC: Taiwan’s surprise export orders contraction (https://graphics.reuters.com/TAIWAN-ECONOMY/ORDERS/xmvjkonrapr/chart.png)
October’s fall – the steepest since January 2020, when it dropped 12.8% – followed September’s annual contraction of 3.1%.
Orders for telecoms products slipped 0.3% in October from a year ago because of weaker consumer demand, but also coming off a high base, the ministry said.
However, orders for electronic products rose 9.6%, driven by demand for high-end computing, automobiles and stockpiling ahead of the end of the year, it added.
There were also many clouds ahead, despite “growth momentum” from automotive electronics and data centres ahead of the year-end holiday season in Western markets and January’s Lunar New Year holiday in East Asia, it added.
“Global inflation and interest rate pressures continue to be high; the war between Russia and Ukraine, and mainland China’s insistence on the zero-COVID policy, will add uncertainty to the economic outlook, which may affect performance of export orders,” it said.
The ministry added that it expected export orders this month to be lower by 14.5% to 17.6% than in November 2021.
Taiwan firms, such as Taiwan Semiconductor Manufacturing Co Ltd, are major suppliers to Apple Inc, Qualcomm Inc and other global tech companies.
Taiwan’s October orders from China plummeted 26.7% from a year earlier, versus September’s annual fall of 27.9%. Month-on-month orders from China dropped 9%.
China has stuck to its stringent zero-COVID approach, even as other nations have eased curbs. That has led to widespread public frustration and damage inflicted on the world’s second-largest economy with lockdowns, some in key industrial areas.
Taiwan’s orders from the United States edged up 1.2% from a year earlier, slower than the rise of 2.8% the previous month.
Export orders from Europe rose 4.3%, versus September’s annual rise of 9.6%. Orders from Japan expanded 8.5%.
(Reporting by Jeanny Kao and Ben Blanchard; Editing by Clarence Fernandez)