Taiwan's exports are expected to slow down significantly in the next few months, according to Finance Minister Su Jain-rong. This is due to weakening global demand, which is putting pressure on the trade-dependent economy.
Su said that growth in overseas shipments is expected to slow down to single-digit levels in the fourth quarter of 2022. This is due to various global factors such as the US Federal Reserve's rate hikes and economic slowdowns in the US and Europe. These factors will have an impact on Taiwan's trade with these major partners.
Taiwan has been experiencing strong export growth for the past year and a half, thanks to increased demand for its electronics and semiconductors due to a global shortage of computer chips. This has helped the economy rebound from the global financial crisis of 2010 and grow at its fastest pace in years.
This year, Taiwan has faced several challenges, including a decrease in global demand for many products and inflation in other countries. Additionally, China, another important trading partner, has struggled with ongoing Covid outbreaks and lockdowns, as well as a property crisis.
August's export growth slowed to a crawl, with just a 2% increase from the previous year. This prompted the Ministry of Finance's chief statistician, Beatrice Tsai, to warn that "winter is coming" earlier than expected. She cautioned that September's exports could even shrink by 3% compared to the previous year.
Export orders have slowed down in recent months. In August, orders rose by 2%, reversing a decline in July. However, purchases from China and Hong Kong fell by more than 25% last month. According to data from the finance ministry, almost 40% of Taiwan’s exports went to Hong Kong and China for the first eight months of the year.
Su said that Taiwan is keeping a close eye on China's economic progress. The sporadic lockdowns in China have had a negative impact on demand and confidence, and this has become a major drag on growth in the world's second-largest economy.
Su warned that we should be careful if something happens to China's economy, and added that Taiwan is trying to mitigate risks stemming from China by diversifying.
In recent years, Taiwan has been working to reduce its dependence on China. Last year, Taipei applied to join the Asia-Pacific's largest trade deal, though its application is still pending.
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