Taiwan’s exports witnessed a sharper decline for the month of May compared to that in April, owing to sluggish growth in global demand. However, this raised probabilities of a rate cut at its policy meeting scheduled on June 30.
Exports fell 9.6 percent y/y in May, compared with a 6.5 percent drop in April. Sluggish global demand has continued to hurt Taiwan’s exports, as shipments to China/Hong Kong fell 10.2 percent, while that to the US declined 8.0 percent. Exports of plastics and rubber fell 16.8 percent, while mineral exports declined 20.7 percent. Meanwhile, electronics shipments continued to be hurt by a general slowdown in the electronics supply chain and declined 1.6 percent. ICT and optical instrument exports also dropped 5.5 percent and 23.5 percent respectively.
Further, capital equipment imports surged 22.2 percent in May, led by machineries which surged 32.6 percent, possibly suggesting a pickup in investments of certain sectors. Meanwhile, inflationary pressures have started to ease with the May consumer price index down to 1.24 percent, from 1.87 percent in April.
Meanwhile, today’s data reveal that another 12.5 bps rate cut is on the cards at the CBC board meeting on June 30. The surprisingly low US job data last week could also indicate the general sluggishness of demand from the US.
“In addition, a possible delay of the Fed hike will limit the chance of capital outflows, and hence continue to underpin the strength of the Taiwan dollar,” ANZ said in a research note.
The material has been provided by InstaForex Company – www.instaforex.com