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UPDATE 2-Taiwan's May exports expand for 8th month, but momentum may slow
June 7, 2017 / 9:24 AM / 6 months ago

UPDATE 2-Taiwan's May exports expand for 8th month, but momentum may slow

* Export momentum in H2 could slow

* Shipments to China +6.4 pct y/y, U.S. +12.9 pct

* Trade surplus with Unite States at $1.6 bln in Jan-May (Adds analyst comment in fourth paragraph)

By Faith Hung and Roger Tung

TAIPEI, June 7 (Reuters) - Taiwan’s exports in May expanded for the eighth straight month as factories churned out supplies for Apple Inc’s new iPhone, bolstering the island’s growth outlook even though momentum is likely to cool in the second half of the year.

Exports rose 8.4 percent from a year earlier, slowing from a 9.4 percent gain in April, the finance ministry said on Wednesday, but better than the 7.2 percent pace forecast in a Reuters poll.

The data bodes well for the trade-reliant economy and reinforces expectations the central bank will leave its key policy rate steady for the fourth quarter in a row this month.

“There is no urgent reason for the central bank to raise interest rates this year. The current CPI (consumer price index) level remains low and export momentum could drop off in the second half of the year,” said Kevin Wang, an analyst of Taishin Securities Investment Advisory in Taipei.

While expectations for Apple’s iPhone 8 and other tech products are high, the ministry cautioned against early optimism.

“It is difficult to predict the momentum for new products like high-end smartphones,” said Beatrice Tsai, a ministry official. “Exports for the second half of the year can be expected to slow down, in part because of a higher base last year.”

The government has raised its 2017 economic growth forecast to a three-year high, as exports improve on strong global demand.

Taiwan is a major link in the global manufacturing supply chain and its export trend is a key gauge of worldwide demand for technology gadgets. The island’s export industries traditionally experience a slow season in the second quarter.

Shipments in May to its two biggest markets, China and the United States, were strong, up 6.4 percent and 12.9 percent from a year earlier, respectively.

Imports rose 10.2 percent versus a forecast 11.4 percent gain. That produced a trade surplus of $3.46 billion in May, slightly more than economists’ expectations of $3.315 billion.

Taiwan’s trade surplus with the United States was $628 million in May, expanding to $1.648 billion from January to May, the ministry said. That remained below one of the thresholds that could trigger punitive trade talks by the U.S. Treasury.

“We haven’t gone over the red line,” Tsai said.

Taiwan appeared again alongside China, Japan, South Korea, Switzerland and Germany on the latest watchlist of countries that the United States would monitor as potential currency manipulators.

The Taiwan dollar is one of the region’s best-performing currencies, up around 7 percent against the U.S. dollar so far this year. Its central bank has refrained from weakening the currency through market intervention, as a precaution against being labeled a currency manipulator by the U.S. Treasury.

Additional reporting by Emily Chan; Editing by Jacqueline Wong

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