Falling crude oil prices may save the nation from posting a trade deficit this month but would not fuel export momentum, which has showed signs of slackening since the beginning of the second half amid a global economic slowdown, pundits said yesterday.
Last month, the nation posted a trade deficit of US$410 million for the first time in two-and-a-half years amid surging oil and metal costs, which drove imports up 12.3 percent year-on-year to US$23.28 billion.
Exports, which had bolstered the economy in the first half by posting double-digit growth, reported a modest gain of 8 percent during the same period.
The Board of Foreign Trade said yesterday that surging fuel and raw material costs were to blame for last month’s trade deficit.
Oil imports last month rose 68.7 percent year-on-year to US$1.38 billion last month, while metal imports surged 22.2 percent, Ministry of Finance statistics showed.
However, the trade deficit is unlikely to recur this month, the board said, given that oil, steel and iron prices had dropped significantly.
Crude oil hit a record US$147 a barrel on July 11, but traded at US$112.91 yesterday.
Liang Kuo-yuan (梁國源), president of Polaris Research Institute, agreed, saying that sliding oil prices were encouraging and could probably reverse the trade balance this month.
“Imports are set to shrink this month in US dollar terms,” Liang said in a telephone interview. “High oil prices also helped curb demand.”
But Liang warned the declining oil prices might not be enough to drive exports, the principal contributor of the nation’s GDP growth.
The researcher said that shipments to Hong Kong and China, Taiwan’s largest export destinations, edged up only 4 percent to US$8.94 billion last month, compared with 25.5 percent in June.
Meanwhile, exports to Europe climbed 5.8 percent to US$2.53 billion, down from 24.2 percent a month earlier, Liang said, adding that the decline in trade with the US widened to 6.1 percent, from 2.6 percent in June.
Liang said the figures indicated that the slowdown had spread from the US to Europe and emerging markets in Asia and the development was bound to hurt the nation’s exports.
Though the central bank has allowed the local currency to depreciate against the greenback to help exports, Liang said the tactic was not potent enough to offset falling demand from major trade partners.
“In fact, I’m afraid that a weakened local currency may drive up the import volume,” Liang said.
Norman Yin (殷乃平), money and banking professor at National Chengchi University, agreed.
Yin said that the nation would not reap quick benefits from falling oil prices, which appeared to have little impact on commodity prices.
“It seems that currencies worldwide have weakened against commodities,” Yin said by telephone.
“The trend will render the depreciation of the New Taiwan dollar ineffective in galvanizing exports, which will post stable but slow growth for the rest of the year,” Yin said.
Taiwan’s technology protection rules prohibits Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) from producing 2-nanometer chips abroad, so the company must keep its most cutting-edge technology at home, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. Kuo made the remarks in response to concerns that TSMC might be forced to produce advanced 2-nanometer chips at its fabs in Arizona ahead of schedule after former US president Donald Trump was re-elected as the next US president on Tuesday. “Since Taiwan has related regulations to protect its own technologies, TSMC cannot produce 2-nanometer chips overseas currently,” Kuo said at a meeting of the legislature’s
GEOPOLITICAL ISSUES? The economics ministry said that political factors should not affect supply chains linking global satellite firms and Taiwanese manufacturers Elon Musk’s Space Exploration Technologies Corp (SpaceX) asked Taiwanese suppliers to transfer manufacturing out of Taiwan, leading to some relocating portions of their supply chain, according to sources employed by and close to the equipment makers and corporate documents. A source at a company that is one of the numerous subcontractors that provide components for SpaceX’s Starlink satellite Internet products said that SpaceX asked their manufacturers to produce outside of Taiwan because of geopolitical risks, pushing at least one to move production to Vietnam. A second source who collaborates with Taiwanese satellite component makers in the nation said that suppliers were directly
Top Taiwanese officials yesterday moved to ease concern about the potential fallout of Donald Trump’s return to the White House, making a case that the technology restrictions promised by the former US president against China would outweigh the risks to the island. The prospect of Trump’s victory in this week’s election is a worry for Taipei given the Republican nominee in the past cast doubt over the US commitment to defend it from Beijing. But other policies championed by Trump toward China hold some appeal for Taiwan. National Development Council Minister Paul Liu (劉鏡清) described the proposed technology curbs as potentially having
EXPORT CONTROLS: US lawmakers have grown more concerned that the US Department of Commerce might not be aggressively enforcing its chip restrictions The US on Friday said it imposed a US$500,000 penalty on New York-based GlobalFoundries Inc, the world’s third-largest contract chipmaker, for shipping chips without authorization to an affiliate of blacklisted Chinese chipmaker Semiconductor Manufacturing International Corp (SMIC, 中芯). The US Department of Commerce in a statement said GlobalFoundries sent 74 shipments worth US$17.1 million to SJ Semiconductor Corp (盛合晶微半導體), an affiliate of SMIC, without seeking a license. Both SMIC and SJ Semiconductor were added to the department’s trade restriction Entity List in 2020 over SMIC’s alleged ties to the Chinese military-industrial complex. SMIC has denied wrongdoing. Exports to firms on the list
RSS