Taiwan June exports slump the most in 14 years on weak China, US demand

© Reuters. A cargo ship is pictured at a port in Keelung, Taiwan, January 7, 2022. REUTERS/Ann Wang

By Roger Tung and Faith Hung

TAIPEI (Reuters) -Taiwan's exports fell more than expected in June, slumping the most in almost 14 years, as the island struggled with persistent weakness in demand from the U.S. and China for its hi-tech products.

As Taiwan is often considered a bellwether of global electronics demand, the sharp slump adds to worries about a much weaker second half of the year.

June exports plunged 23.4% in value from a year earlier to $32.32 billion, the finance ministry said on Friday, the 10th consecutive month of decline. That was worse than a fall of 14.1% in May and missed a Reuters poll forecast for a 13.35% contraction.

Taiwan's export-reliant economy will probably grow more slowly in 2023 than previously forecast, the government has said. First-quarter GDP fell by a revised 2.87% year-on-year, its worst performance since 2009 and suggesting the economy has slipped into recession.

Total shipments of electronic components in June fell 21.3% from the year before to $13.58 billion, with semiconductor exports down 20.8%.

The outlook remains grim, the ministry said on Friday, adding that it expected exports in July to drop between 16% and 19.5% on-year and forecasting "considerable pressure" on foreign trade from global interest rate rises to control inflation as well as broader global economic uncertainties.

The chance that exports will return to growth in September has "dramatically decreased," the ministry said, adding that would be more likely to occur in November.

The second half of the year is when orders traditionally pick up ahead of the busy year-end shopping season.

Taiwanese firms such as TSMC, the world's largest contract chipmaker, are major suppliers to Apple Inc (NASDAQ:AAPL), Nvidia and other global tech giants, besides providing chips for auto companies and lower-end consumer goods.

United Microelectronics Corp, a smaller competitor of TSMC's, reported on Thursday that June sales dropped 23.2% on the year.

At $11.99 billion in June, Taiwan's exports to China were down 22.2% from a year earlier, after the prior month's drop of 19.4%.

Exports to the United States fell 25.2% in June, after slipping an annual 3.5% in May.

Taiwan's June imports, often seen as a leading indicator of re-exports of finished products, dropped 29.9% to $26.36 billion. That compared with economists' forecast of a 16.7% fall and a 21.7% decline in May.