Taiwan's merchandise exports decreased for the fifth successive month in July as the global economic slowdown and debt worries in Europe continued to weigh on demand.
Total exports plunged 11.6 percent year-on-year to USD 24.85 billion, notably worse than the 3.2 percent decrease seen in June, data released by the Ministry of Finance showed Tuesday. The latest decline far exceeded the 7.4 percent fall economists had forecast.
The July decrease was the worst since January, when exports dropped 16.8 percent. Shipments of information and communication products, which is a key item of the island's exports, plummeted 34.5 percent in July.
Among Taiwan's major trade partners, exports to China fell 11 percent, shipments to the U.S. dropped 20 percent in July, and exports to Japan posted a 4.2 percent fall. The value of shipments to South Korea was lower by 16.2 percent compared to July last year, while dispatches to Germany fell by 21.3 percent.
Imports, meanwhile, dropped at a slower rate of 3.2 percent than the previous month's 8.4 percent. Economists had expected the value of arrivals to decrease 7.4 percent.
July's overall trade resulted in a surplus of USD 903.9 million, which was sharply lower than the USD 2.576 billion surplus recorded in June, and USD 2.8 billion forecast by economists.
In the January-July period, exports dropped 5.8 percent from the same period a year earlier, while imports decreased by 5.4 percent, resulting in a surplus of USD 12.108 billion.
Taiwan's exports are expected to weaken going forward due to impacts of the European debt crisis and slowdown in major economies. The economy contracted 0.16 percent year-on-year in the second quarter, marking the first decline in GDP since the third quarter of 2009.
The statistical agency lowered the growth forecast for the economy this year to 2.08 percent from the previously projected 3.03 percent. The weak trade activity due to a slowdown in global demand, coupled with sluggishness in the domestic sector, contributed negatively to the GDP in the second quarter, the agency added.
The country's central bank in June kept its benchmark interest rate unchanged at 1.875 percent and said downside risks to global economic outlook remain high. The previous policy change was in July last year when the rate was slashed from 1.750 percent.
Inflation surged to a near four-year high 0f 2.46 percent in July on higher food costs, limiting room for the central bank to ease monetary policy in response to flagging economic activity. Core inflation was 0.96 percent.
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