Taiwan's November export orders grew for a fourth straight month on seasonal demand for tech gadgets, giving the island's central bank another reason to stand pat on interest rates this week. But orders remain on track to contract for the second year this year, with global headwinds emerging for 2017, casting doubt on the sustainability of the recent upswing.
The trade-dependent economy posted the sharpest rise in actual exports in nearly four years last month, underpinned by strong chip demand, indicating a stable recovery in the Asian tech manufacturing hub amid a more subdued outlook in the region. Taiwan's economics ministry, however, said the value of December export orders was expected to fall below November's $43.6 billion, leaving full year orders in the red for the second year running. Orders fell 4.4 percent last year, the worst performance in six years.
"It seems like it's clearly a Christmas related thing," said ING economist Tim Condon in Singapore. "We haven't seen any real breakout in the dollar values (to signal a solid recovery)." Export orders in November rose 7 percent from a year earlier, faster than the 0.3 percent increase in October and 5 percent growth in a Reuters poll. Taiwan's export orders are a gauge of high-tech demand and typically lead actual exports by two to three months.
"For the full year, export orders will likely contract around 1 percent," ministry official L.J. Lin told a news conference. She said orders in December could reach $42.6 billion to $43.6 billion, growth of as much as around 12 percent year on year, but estimated for the full year, orders may reach as much as $446.9 billion - shy of 2015's $451.81 billion total.
Orders from major markets the United States and China posted double-digit annual growth in November, rising 10.1 percent and 12 percent, respectively. In key categories, orders for electronics goods rose 10.1 percent in November from a year ago, while those for information and communication products, which include smartphones, were up 6.9 percent last month, the ministry said.
The upbeat data bolsters views the central bank will likely keep its benchmark rates steady again when it meets for its quarterly meeting on Thursday, after standing pat in September. "Even though last week the United States raised rates, Taiwan's central bank will maintain unchanged rates this week because the case for the economic recovery is not very strong," said Kevin Wang, analyst at Taishin Securities Investment Advisory in Taipei.