Taiwan’s export orders experience 2nd consecutive annual drop amid Global challenges

Last month, export orders plunged by 16% year-on-year to US$43.81 billion, falling below the ministry’s forecast of an 8% decline. The persistent challenges of a wavering global economy impacting consumer spending, coupled with ongoing supply chain corrections, contributed to the disappointing performance.

Taiwan’s export orders faced a steeper annual contraction of 15.9%, amounting to approximately US$561.04 billion last year, marking a second consecutive year of decline, as reported by the Ministry of Economic Affairs.

Last month, export orders plunged by 16% year-on-year to US$43.81 billion, falling below the ministry’s forecast of an 8% decline. The persistent challenges of a wavering global economy impacting consumer spending, coupled with ongoing supply chain corrections, contributed to the disappointing performance.

While Taiwanese manufacturers experienced a second consecutive year of declining orders, the total still represented the third-highest amount on record, according to the ministry. Geographically, the US, Europe, and China witnessed record-setting declines in export orders at rates of 14.8%, 30%, and 17.2%, respectively. In contrast, the ASEAN region was the sole area showing growth, with an annual expansion of 14.7%, based on ministry data.

Amid escalating external uncertainties, the Ministry of Economic Affairs expressed a lack of visibility regarding a near-term recovery in export orders. Forecasts suggest a continued dip in orders between 15.8% and 20% annually for the current month, ranging from US$38 billion to US$40 billion. Seasonal weaknesses and a higher comparison base from the previous year are expected to contribute to the ongoing challenges.

Huang Yu-ling, Director of the Department of Statistics at the Ministry, highlighted several factors contributing to the subdued outlook. In addition to high inflation and interest rates, geopolitical tensions, and inventory adjustments, attacks on cargo ships in the Red Sea are of particular concern. These attacks have led to rising shipping costs and extended transportation times, potentially resulting in supply chain disruptions and inflation spikes.

Despite the challenging landscape, Huang expressed optimism about the coming year, anticipating improved export orders. The demand for emerging technologies such as artificial intelligence (AI) and high-performance computing is expected to drive growth. Taiwanese manufacturers are also poised to benefit from the forecasted global trade expansion, according to the World Bank.

A breakdown of last month’s data revealed a 25.3% annual decline in orders for information and communications technology (ICT) products, totalling US$12.27 billion. Electronic component orders shrank by 12.9%, reaching US$14.92 billion, primarily due to reduced demand for memory chips, foundry products, and printed circuit boards. Other sectors, including optoelectronics, base metals, machinery, plastic products, and petrochemical products, also faced varying degrees of decline in both monthly and annual comparisons.