Taiwan's exports to climb a measly 3.3%

But full recovery will be delayed until 2H.

According to DBS, the external trade data for April are due today. Exports are projected to rise 3.3% YoY, only slightly better than the 2.6% growth rate on average in 1Q13 and 2.5% in 4Q12.

Here's more:

Export orders made a big swing, falling from 7.6% in 4Q12 to -1.7% in 1Q13. The growth pattern in exports appeared to be relatively stable in the past several months. As exports didn’t experience a strong rise as export ordersin the preceding months, a large pullback in exportsshould also be unlikely.

Fundamentally speaking, external demand has remained weak, in light of a slower than expected recovery in China, fragile growth in the US and continued contraction in Europe.

A notable recovery in exports will be postponed to the second half of this year. Thankfully,the adverse impact of yen depreciation has remained small. On the relative basis, Taiwan’s export growth continued to outpace Japan’sin 1Q (2.6% YoY vs. -13.0%, in USD terms).

In the electronics sector where the bilateral competition isintensive, Taiwan also outperformed Japan by a wide margin (3.2% vs. -15.7% in 1Q).

Despite a delayed recovery in exports, we still expect GDP growth to rise in 2Q. Importsshould have slowed in April on the back of cheaper energy prices and cooling imports of capital goods. We projectimport growth of 1.5% YoY in April, down from 4.4% in 1Q. Trade surplus(seasonally adjusted) will likely widen to USD 2.5bn, higherthan the monthly level of USD 1.5bn in Jan-Mar.

Net exports(a big drag to 1Q GDP) is expected to improve in 2Q. Meanwhile,thanksto lower oil prices, CPI inflation has eased to 1.0% YoY in April (vs. 1.8% in 1Q). The slowdown in supply-side inflation bodes wellfor a recovery in real income growth and strengthening of consumers’real purchasing power.

Combined with the support of a stable labour market,rebound in stock market prices and increase in consumer confidence, consumption growth
is expected to pick up this quarter after a temporary drop in 1Q.

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