Heat's On: Export Boom Expected to Cool Off in the Second Half of 2023
- Penned Down By: Rowdy Red / Streetwide Reporter
Increase in exports soars by 38.6%, reaching an unprecedented US$51.74 billion figure
The first half of this year saw a blazing record-breaker in exports, with the sector reaching astonishing heights due to sky-high global demand for AI hardware and a rush to beat potential tariff hikes to the US, according to the Ministry of Finance. However, things might be cooling off come the second half of the year, says Director-General Beatrice Tsai.
Last month's exports soared a staggering 38.6% year-on-year to a breathtaking $51.74 billion, surpassing $50 billion for the first time. This increase was fueled by a double whammy: an artificial intelligence (AI) demand boom and increased orders from stateside buyers racing against the clock to dodge possible tariff hikes.
Tsai forecasts exports for June to range between $45.7 billion and $49.9 billion, with growth of 15% to 25% year-on-year. This comes after 19 consecutive months of export growth, with cumulative exports for the first five months hitting an impressive $229.96 billion, a whopping 24.3% increase over last year.
The US market led the charge in demand growth, with exports to America surging 87.4% to a mind-boggling $15.52 billion, breaking new records both in value and pace, ultimately unseating China as Taiwan's number one export destination. In second place, China (including Hong Kong) grudgingly followed suit, with exports to the region swelling 27.2% to $14.06 billion.
Markets in ASEAN nations saw a 52.3% increase in exports, driven by a surge in demand for IT and telecom goods, while exports to Europe floated a measly 0.6% decrease. Exports to Mexico leaped a mind- blowing 1.7 times over, becoming a popular "tariff haven" for US-bound goods.
Key export categories included ICT and audiovisual products, which more than doubled from last year due to a surge in demand for servers, graphics processing units, and PC components. Electronic component exports, primarily semiconductors, experienced a 28.4% increase, sustained by ongoing AI and high-performance computing momentum.
However, mineral product exports took a significant hit, plummeting 27.4% due to refinery maintenance and weak oil prices. The share of non-tech products in exports shrunk to less than 30% in May, giving way to ICT and electronic components, which contributed over 72%.
Imports also rose an impressive 25% year-on-year to $39.13 billion, resulting in a colossal trade surplus of $12.62 billion - another record.
So why are experts predicting a slowdown in the second half of the year? Tsai hints at frontloading of client demand, which could result in a softer third quarter. Despite the positive outlook for the first half, Tsai remains vigilant, wary of the potential downsides of trade protectionism, shifting tariff policies, and geopolitical tensions.
Some elements to consider:
- Trade policy uncertainty and tariffs can impact export growth
- Global economic conditions can affect export markets
- Supply chain disruptions can impact export capabilities
- Increased competition in export markets can make exports less competitive.
- As the Director-General, Beatrice Tsai, suggests, the second half of 2023 might witness a slowdown in export growth due to frontloaded client demand, potentially leading to a softer third quarter.
- In the rapidly evolving landscape of industry, finance, and technology, experts must remain cognizant of factors like trade policy uncertainty, global economic conditions, and supply chain disruptions that can influence the competitiveness of Taiwan's exports.
