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China is Taiwan's biggest trade partner – China and Hong Kong buy about 40% of Taiwan's total exports. But, weakened demand from China has been affecting the island's exports growth. Even though Taiwan's Q3 GDP grew 4.1%, which was faster than expected, its export outlook has been weighed down by global inflation, tighter monetary policy, the Russia-Ukraine war and US-China tensions. China's strict COVID curbs have brought down demand, and it also banned shipments from more than 100 exporters in Taiwan ahead of US Speaker Nancy Pelosi's visit to the island. With all this, forecasts have predicted Taiwan's October exports to contract by around 6%.
But, on Tuesday, Taiwan's Ministry of Economic Affairs released data showing that Taiwan's exports dropped only 0.5% in October, which was way better than expected and an improvement from September's 5.3% decrease. While its exports to Hong Kong and China did drop by 9.2%, exports to other countries jumped, with the US, Japan and Singapore helping to offset a slump. Still, Beatrice Tsai, the finance ministry's chief statistician, said on Tuesday that November's exports are expected to fall between 5% and 8%.
"The strong exports performance from the beginning of the year offsets the weakness" this quarter, said Beatrice Tsai, Taiwan's finance ministry's chief statistician.
"Taiwan's export momentum will significantly weaken in the fourth quarter," said Kevin Wang, an economist at Taishin Securities Investment Advisory Co., on Monday. "We expect exports to show negative growth every month through the end of 2022."
"It's a reflection of slow-growing demand," said Tony Phoo, a Taipei-based economist with Standard Chartered Bank. "Despite all of the effort to diversify away from China, China still remains the world's largest producer. It produces not only for the global economy, but for its own economy as well."