Summary of Trends in International Trade for September 2020
According to the forecast released by IHS Markit (IHS) on September 15, 2020, the global economy in 2020 will shrink by 4.8%. This figure is 0.2 percentage points higher than the previous (August) forecast. IHS pointed out that COVID-19 has negatively affected the global economy, such as in widening the income gap and changing the industrial structure. The recovery schedule seems full of uncertainties.
In August 2020, Taiwan's Monitoring Indicator turned to a green light. The Coincident Indicators and the Leading Indicators continued to rise, and the Manufacturing Purchasing Managers Index expanded for the second consecutive month. In the manufacturing sector, IT electronics manufacturing are maintaining their momentum thanks to the increased application of 5G communications, high-performance computing, work-from-home business opportunities, and strong demand from China before the US ban took effect. Export orders continued to grow owing to the demand for high-end semiconductor processing and the demand from the home economy and for remote work and living products. The index of managers’ outlook for the next 6 months revealed a return to optimism, reflecting the gradual lessening of impact from the pandemic. However, many uncertainties such as another peak in infections and unresolved US-China technological conflicts deserve continued and close observation.
Our export orders in August 2020 reached US$45.49 billion, representing an increase of 13.6%. The main reasons for this surge are the robust demand for semiconductor advanced processing and the continued blossoming of the remote economy increasing orders for technology products.
In August 2020, Taiwan’s foreign trade totaled US$55.88 billion, or an increase of 8.4%. Of this total, Taiwan’s exports accounted for US$31.17billion, or an increase of 8.3%. This has been mainly due to the removal of lockdown by various countries, development in emerging technologies and the remote economy. Meanwhile, imports accounted for US$24.71 billion, or an increase of 8.6%.
Observations on the performance of Taiwan and its major trading partners:
Taiwan's exports to its major trading partners (mainland China, the 10 ASEAN countries, the US, Japan, and the EU) in August showed mixed trends with growths of 22.6% and 13.9% for mainland China and the US, respectively; and declines for Japan, the ASEAN 10 and the EU of 8.3%, 3.3% and 2.8%.
Taiwan's imports from its major trading partners (mainland China, Japan, the ASEAN 10, the EU and the US) in August showed the biggest increase from mainland China, by 21.6%, followed by the EU by 20.4%, the ASEAN 10 by 13.0%, Japan by 12.1% and the US by 1.4%.
In August 2020, exports of electrical equipment and parts (HS85) grew the most, increasing by US$2.31 billion. This was the result of the electronic peak season effect and a continuation of the home-bound economy.