World Economy

Taiwan Trade Surplus to Boost GDP Growth

Taiwan Trade Surplus to Boost GDP Growth
Taiwan Trade Surplus to Boost GDP Growth

Taiwan’s sharp gain in its trade surplus in May is expected to boost the country’s gross domestic product (GDP) growth in the second quarter, according to research by British banking group Standard Chartered Bank.

Tony Phoo, a senior economist with Standard Chartered, said in a research report that Taiwan’s exports declined by 3.8 percent year-on-year in May, better than the market consensus of dropping 9.5 percent and narrowing from the a decline of 11.7 percent recorded in April, Focus Taiwan reported.

Also, Taiwan’s imports fell by 5.4 percent year-on-year last month, a significant improvement from a decrease of 22.1 percent in April and less than the 11.0 percent drop expected by the market, Phoo said.

On a slightly positive side, he added, the overall trade surplus rose to $5.42 billion in May from $4.76 billion in April, as imports declined by bigger margin than exports.

“This suggests the total trade surplus could rise to more than $15 billion in Q2 2015. This will be significantly larger than the $9.7 billion recorded in Q2 2014. The sharp gain in the trade surplus will also contribute positively to overall real GDP growth in Q2,” the economist said.

A breakdown of the May data shows that tech exports grew on a monthly basis in May for the second time in the past three months, suggesting that external demand for tech continued to hold up into the slow season, Phoo said.

In terms of export destinations, the United States continued to show monthly and annual gains, suggesting steady demand recovery, while exports to both Europe and China fell in May from a year earlier, Phoo said.

Demand from China, in particular, has acted as “a major drag on overall exports in 2015,” according to Phoo.